MUMBAI, Aug 18: Indian Oil Corp Ltd is in talks with an Iranian firm to buy out its 15 per cent holding in Chennai Petroleum Corp Ltd, to enable the merger of the two Indian firms, a government minister said on Thursday.

The merger would help reduce costs of state-run Indian Oil, the country’s largest refiner and a marketing firm, but it needs to acquire the National Iran Oil Company’s stake to make that possible, Indian Oil Minister Mani Shankar Aiyar told parliament.

“Once the process is complete, IOC would initiate necessary proposal for merger of CPCL with itself,” Mr Aiyar said. Chennai Petroleum operates a 150,000 barrels per day (bpd) refinery in the southern state of Tamil Nadu, but has no marketing network.

State-run Indian oil marketing firms posted losses in the past quarter because the government had allowed only a seven per cent rise in pump prices of petrol and diesel in June, despite oil prices soaring about 50 per cent since January.

Indian Oil also aims to merge two other subsidiaries — Bongaigaon Refinery and Petrochemicals Ltd, which runs a 47,000 bpd unit in Assam, and IBP Company Ltd, a marketing company.

“The boards of IOC and Bongaigaon Refinery have given an in-principle approval for the proposed merger,” Mr Aiyar said, adding that the two companies were in the process of appointing agencies to work out a swap ratio. The government is examining the IBP merger proposal, he said.—Reuters