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| OilMin okays stake dilution in ONGC, IOC |
| BS Reporters / Chennai/New Delhi Sep 07, 2010, 01:01 IST |
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The petroleum ministry has approved part-sale of government’s stake in Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC), a move that could fetch the government over Rs 24,000 crore this financial year.
“The oil ministry has taken an in-principle decision. We have to go to the cabinet now,” petroleum secretary S Sundareshan told reporters today.
IOC is to the first to be disinvested, where alongside the 10 per cent stake sale by the government, the company will do a follow-on public offer (FPO) of 10 per cent of expanded equity to raise close to Rs 9,000 crore for part-financing its capital expenditure. The government’s sale of its 10 per cent stake or 190 millione share in IOC will help it raise Rs 10,321 crore at today’s closing price of Rs 425.10 per share.
The ONGC issue, in which the government would offload five per cent stake or 106 million shares through an FPO, will help the government raise Rs 14,438 crore at today’s closing price of Rs 1,350.10 per share.
Following the stake sale, the government’s shareholding in ONGC will reduce from 74.14 to 69.14 per cent. In IOC, the twin divestment and stake sale would bring down the government holding from 78.92 per cent to 64.57 per cent.
IOC chairman B M Bansal told reporters in Chennai today that, “We welcome the FPO and would like to dilute up to 10 per cent equity. The money will help our ongoing capex programme, without relying much on debt.”
He said the company planned to invest around Rs 50,000 crore over the next five years towards expanding its refining and petrochemical capacities.
The share prices of both these companies had appreciated in the recent past due to positive moves by the government. IOC gained due to the June 25 move to decontrol petrol prices and raise those of diesel, kerosene and LPG. For ONGC, the driving factor has been an increase in APM (administered price mechanism) gas price.
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