Govt to divest stake in ONGC, IOC; may raise Rs21k cr

Govt to divest stake in ONGC, IOC; may raise Rs21k cr

New Delhi: The government plans to sell 5% of its stake in Oil and Natural Gas Corp (ONGC) and 10% in Indian Oil Corp (IOC) to raise about Rs21,000 crore this fiscal, oil secretary S Sundareshan said on Friday.

“We have received a note from Department of Disinvestment that says they have approval of the finance ministry for divestment of government stake in ONGC and IOC," he told PTI here.

The proposal, he said, is for sale of 5%, or 10.6 crore equity shares, in ONGC through a follow-on public offer (FPO) which at Friday’s trading price of Rs1,233.25 would fetch the government Rs13,189 crore.

In IOC, DoD has proposed to sell 5% of government equity through a FPO.

“Simultaneously, IOC also proposes to sell 10% of the expanded equity capital (through an FPO) to raise funds for its expansion plans," he said.

Post stake sale, the government’s shareholding in ONGC will come down to 69.14% from 74.14% currently. In IOC, the twin divestment and stake sale would reduce the government holding from 78.92% to 64.57%.

“We are not preparing any cabinet note. It is the Department of Disinvestment which will do that. We only have to seek approval (for the stake sale) from the (oil) minister (Murli Deora)," Sundareshan said.

According to the road map being prepared, IOC would be the first to be disinvested. It will first sell 10% or 24.27 crore equity shares that at today’s stock price of Rs363.90 would fetch the company Rs8,835 crore to help it part-finance its capital expenditure programme of Rs75,000 crore.

This would be followed sale of 10% government holding amounting to 19 crore shares to raise Rs7,000 crore.

ONGC divestment will follow this.

IOC has written to the oil ministry expressing its interest in raising money from the market for its capital investment requirement.

The nation’s largest oil firm wants to take advantage of the recent government decision to free fuel prices by tapping the capital markets.

The government had in June decontrolled petrol price that resulted in a Rs3.50 per litre hike in rates in Delhi. Also, diesel prices were hiked by Rs2 per litre, domestic LPG by Rs35 per cylinder and Rs3 a litre on kerosene.

Despite the June move, IOC currently loses Rs2.76 a litre on diesel, Rs170.57 per litre on LPG and Rs15.41 a litre on kerosene and is estimated to lose Rs31,770 crore in revenues this fiscal.