New Delhi: The government is considering selling 10% in Indian Oil Corp and 5% in Oil and Natural Gas Corp in the March quarter, a deal that could fetch the government about $5.6 billion at current prices.
“The oil ministry has taken an in-principle decision, we have to go to the cabinet now,” oil secretary S. Sundareshan told reporters on Monday.
The sales will be part of a government plan to sell stakes in about 60 state-run firms over the next few years, as India moves to cut a stubbornly high fiscal deficit and garner funds to spend on schemes for the poor.
The Centre expects to raise about $8.6 billion in the current fiscal year that ends next March through such sales.
Sundareshan said the oil ministry had also allowed refiner Indian Oil Corp to sell an additional 10% of the expanded share capital. Asked if the share sale of the two firms would happen by the end of this fiscal, he said, “hopefully”. The government owns 78.92% of Indian Oil Corp and 74.14% in ONGC.
At 2.40 p.m., IOC’s shares were trading at Rs425.35 ($9.15) a piece and ONGC was at Rs1350.5 a share. Sundareshan also said the Asian Development Bank had written a letter seeking to exit from gas firm Petronet LNG.
Petronet was founded by state-run firms IOC, ONGC, Bharat Petroleum Corp and GAIL (India) that together own 50% stake. “They (ADB) have made an offer in the past. They have said again. Their policy is to exit after a company is functioning,” Sundareshan, who is also chairman of Petronet, said.
He said the state-run companies may not exercise their right of first refusal for the ADB holding.
“It is a private company. If they (state-run firms) raise the stake it will cease to be a private company,” he said.
France’s GDF Suez holds 10% and the Asian Development Bank (ADB) holds 5.2% stake in Petronet while the balance 34.8% is held by the public.