Oil and Natural Gas Corporation is likely to buy 16.95 per cent stake of Hindustan Petroleum Corporation Ltd in Mangalore Refinery and Petrochemicals Ltd for about Rs 550 crore (Rs 5,500 million).

"A proposal (for the acquisition of HPCL's stake in MRPL) is with the government for approval," ONGC chairman and managing director Subir Raha told a news conference in New Delhi.

The proposal to buy HPCL's 29,71,53,517 shares will now be put before the Cabinet for final approval, he said, adding if approved, ONGC's stake in MRPL will climb to 87.95 per cent.

HPCL chairman and managing director M B Lal said: "We have only marginal interest (in MRPL)."

ONGC had last year bought out Aditya Birla Group's 37.4 per cent stake in the loss-making MRPL for Rs 59.43 crore (Rs 594.3 million) at Rs 2 per share. The company infused an additional Rs 600 crore (Rs 6,000 million) as fresh capital as part of a debt-restructuring package.

"The acquisition price will be decided as per the Sebi norms," senior ONGC officials said.

The ONGC board had on September 24 last year decided to submit a formal proposal to the petroleum and natural gas ministry for the company's intent to acquire the entire shareholding of HPCL at a price of about Rs 37.75 per share.