Financial Daily from THE HINDU group of publications
Thursday, Nov 13, 2003
Industry & Economy
Markets - IPOs
IOC, ONGC equity offer in domestic market proposed
New Delhi , Nov. 12
THE Government is mulling the option of selling its 20 per cent stake in Indian Oil Corporation and 5 per cent stake in Oil and Natural Gas Corporation in the domestic markets to bridge the fiscal deficit.
"We are considering the option of selling our (Government's) share in IOC and ONGC through a public issue," the Petroleum Secretary, Mr B.K. Chaturvedi, told newspersons here.
Mr Chaturvedi ruled out overseas equity sale in IOC and ONGC as listing requirements would require time to fulfil.
"What is possible is a domestic offering (of equity shares) this fiscal," he said. Post-sale, ONGC and IOC will continue to remain in Government hands.
Mr Chaturvedi and the Disinvestment Secretary, Mr Dhirendra Singh, are scheduled to meet on November 13 to firm up the sale plans.
As part of its option paper prepared after the meeting of the Cabinet Committee on Disinvestment (CCD) in early October, the Petroleum Ministry had mooted the sale of Government equity in IOC and ONGC.
The committee asked the Government to explore the possibility of selling the marketing arm of IOC after privatisation of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd ran into legal trouble.
In September, the Supreme Court directed the Government to seek parliamentary approval prior to disinvestment in the two PSUs.
According to Mr Chaturvedi, the Petroleum Ministry has also moved a Cabinet note to allow the dissolution of cross-holding among the oil companies ONGC, IOC and Gail (India) Ltd.
IOC has a 9.62 per cent stake in ONGC and a 4.8 per cent holding in Gail. ONGC, on the other hand, has a 9.11 per cent stake in IOC and a 4.82 per cent holding in Gail. Gail, meanwhile, has a 2.4 per cent stake in ONGC.
"The oil companies have been making requests for getting rid of the cross-holding to increase the liquidity of their shares.
The modalities as to what should be done first selling Government equity or the cross-holding will have to be worked out," Mr Chaturvedi said.
The Government had set a privatisation proceeds target of Rs 13,200 crore for the current financial year ending March 31, 2004. So far, it has raised only around Rs 1,000 crore.
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