The oil ministry is drawing up a proposal to merge Mangalore Refinery and Petrochemicals Limited (BSE:500109) into Hindustan Petroleum Corporation Limited (NSEI:HINDPETRO), the two listed subsidiaries of Oil and Natural Gas Corp. (NSEI:ONGC), according to people familiar with the matter. The idea of the MRPL-HPCL merger h ad been floated soon after ONGC acquired the majority stake in HPCL from the government five years ago but made little progress.

The ministry is now pushing for the merger, which is likely to be a share-swap deal, said the people cited above. HPCL will likely issue fresh shares to MRPL shareholders as part of the merger and there will be no cash outgo, they said.