ONGC is said to plan $4.8 billion Indian Oil, GAIL stake sale
New Delhi: Oil & Natural Gas Corp. (ONGC) plans to sell its holding in two state-run energy companies within a year to repay debt it raised to fund the purchase of the Indian government’s stake in Hindustan Petroleum Corp. Ltd (HPCL), according to people with knowledge of the matter.
The state-run explorer may sell shares of Indian Oil Corp. and GAIL India Ltd in multiple transactions on the open market through the year, the people said, asking not to be identified because the information isn’t public. ONGC has already received the approval of the government and is waiting for the right price to begin offloading the shares, they said.
The sales can help ONGC return to its debt-free status, give it greater flexibility to acquire overseas oil and gas assets and invest in projects to boost output. ONGC holds 13.77% stake in Indian Oil, the nation’s biggest refiner, and 4.83% in its largest gas utility, GAIL. The holdings can fetch over $4.8 billion at current market rates, covering almost 90% of the loans taken by the New Delhi-based driller.
ONGC raised one-year bridge loans worth Rs35,000 crore ($5.4 billion) from seven banks to partly fund the Rs36,900 crore purchase of the government’s holding in HPCL. It tapped the debt market for the first time last month and can pay off its entire loan if it uses part of its Rs13,000 crore of cash reserves.
ONGC rose as much as 3.3% and traded 2.9% higher at Rs190.80 as of 2:55pm in Mumbai on Wednesday. Indian Oil climbed as much as 2.2% to trade 0.9% higher at Rs405.
An ONGC spokesman declined to comment on Wednesday. Finance ministry spokesman D.S. Malik wasn’t immediately available for comment.
“We will use our cash balance first and then liquid assets. Debt will be last,” ONGC chairman Shashi Shanker had said on 22 January, while announcing the HPCL deal that was completed on 31 January. “We will take a call on selling if the market is favourable, but we won’t sell anything in distress.” Bloomberg