ONGC has internally estimated the oil retailer’s worth to be higher than its current market value after evaluating HPCL’s physical assets, marketing network, debt, investments and brand strength, sources said. “The share purchase agreement has been approved by the CGD. The government will soon seek financial proposal from ONGC for its stake in HPCL,” an official told FE. The CGD is understood to have accepted HPCL’s proposal that the company’s central public sector enterprise status would be retained following the acquisition and that the interests of its staff would be protected.

For the Centre, which is facing a shortfall in indirect tax receipts and also certain elements of non-tax revenue, the government-owned explorer’s move to go by the valuation method for the acquisition could come in handy ahead of the Budget. The oil explorer could pay the government through a mix of internal resources and debt raised through bonds for which it will be holding roadshows.

The government had appointed JM Financial as the transaction adviser and Cyril Amarchand Mangaldas as the legal consultant for preparing an information memorandum on HPCL.