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Oil India and IOC to buy assets overseas
By siliconindia
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Monday, 02 April 2007, 17:30 IST
New Delhi: Oil India Ltd (OIL) and Indian Oil Corporation Ltd (IOC) are set to float a separate entity for acquiring oil and gas assets overseas.
The board of OIL has in-principle agreed to set up a special purpose vehicle (SPV) with IOC for overseas assets bidding. The two companies would not need to approach any prospective seller as consortium partners but would go as a single entity.
This move is expected to speed up the acquisition of oil and gas assets abroad. The OIL board, which met up last week, has agreed for the proposal and the IOC board is expected to take up the matter soon, reported a business daily.
The two companies would then work out other details such as where the company would be registered, name, and the capital base of the company. The newspaper also reported that both OIL and IOC would be equal partners (50:50) in the entity.
Elaborating on the decision, a Petroleum Ministry official said that currently the OIL-IOC consortium has to set up a project-specific SPV before acquiring an asset. In fact, the board's approval was in sync with the Petroleum Ministry's thinking to allow both companies to form SPV to undertake overseas projects, including acquisition and exploration.
Under the present dispensation, the OIL-IOC combine as a consortium is allowed to invest up to Rs 300 crore after seeking approvals of the competent authorities board as well as Government approvals for acquiring assets. Mr Ajay Arora, Partner - Oil & Gas Practice, Ernst & Young India, said, "This move would help the OIL-IOC combine to put in place a dedicated team required to focus on acquiring assets and competing in the global market."