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ONGC plans to sell stake in Indian Oil, GAIL for $4.8 bn to repay debt

Indian Oil climbed as much as 2.2% to trade 0.9% higher at Rs 405

Siddhartha Singh & Debjit Chakraborty | Bloombeg 


plans to sell its holding in two state-run energy within a year to repay debt it raised to fund the purchase of the Indian government’s stake in Hindustan Petroleum Corp, according to people with knowledge of the matter.

The state-run explorer may sell shares of Corp and 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. 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 return to its debt-free status, give it greater flexibility to acquire overseas oil and gas assets and invest in projects to boost output. holds 13.77 per cent stake in Indian Oil, the nation’s biggest refiner, and 4.83 percent in its largest gas utility, The holdings can fetch over $4.8 billion at current market rates, covering almost 90 percent of the loans taken by the New Delhi-based driller.

raised one-year bridge loans worth 350 billion rupees ($5.4 billion) from seven banks to partly fund the 369 billion-rupee purchase of the government’s holding in It tapped the debt market for the first time last month and can pay off its entire loan if it uses part of its 130 billion rupees of cash reserves.

rose as much as 3.3 per cent and traded 2.9 per cent higher at Rs 190.80 as of 2:55 p.m. in Mumbai on Wednesday. climbed as much as 2.2 per cent to trade 0.9 per cent higher at Rs 405.

An spokesman declined to comment on Wednesday. Finance Ministry spokesman DS Malik wasn’t immediately available for comment.

“We will use our cash balance first and then liquid assets. Debt will be last,” Chairman Shashi Shanker had said on January 22, while announcing the deal that was completed on January 31. “We will take a call on selling if the market is favorable, but we won’t sell anything in distress.”

First Published: Wed, February 07 2018. 19:08 IST