ONGC share sale may open on Sept 20 or 27

State-owned Oil and Natural Gas Corp's (ONGC) much-delayed Rs 12,000 crore follow-on public offer may open on September 20 or  27.

"ONGC Board approved the red herring prospectus (RHP) yesterday, which will be filed as per the instructions of the government," ONGC Chairman and Managing Director AK Haziraka told reporters here.

The red herring prospectus (RHP) is likely to be filed with market regulator Sebi on September 5.The follow-on public offer (FPO), through which the government is selling 5% of its stake in ONGC, may open on September 20 or 27.

"Keeping the strong fundamentals of ONGC in view, we are confident that the response from the investors will be overwhelming," he said.

On August 29, ONGC's board approved the RHP after incorporating the company's financial results for the April-June quarter.

The government plans to sell 5%, or 427.77 million shares, through the FPO."We are prepared for the FPO and we are awaiting a signal from the Department of Disinvestment, as this is the government's share sale," the official said.

The FPO was originally planned in the 2010-11 fiscal, but was later deferred to April 5 as the company did not have an adequate number of independent directors on its board to meet market regulator Sebi's listing norms.

It was then rescheduled for July 5, but was again deferred due to adverse market  conditions.The government had in January appointed Citigroup, Nomura Holdings, Bank of  America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley to manage ONGC's share sale.

Following the FPO, the government's stake in ONGC will come down to 69.14% from the current 74.14%. The government's ad-hoc subsidy sharing mechanism has cast a shadow over ONGC's share sale during recent months.

Oil and gas producers like ONGC have to make good a part of the revenues that fuel retailers lose on selling diesel, domestic LPG and kerosene at  government-controlled rates. The discount that ONGC gives to IOC, BPCL and HPCL on the crude oil it sells to them is decided on a quarter-to-quarter basis.

Hazarika said he expects the upstream burden to be one-third of the revenues loss  on fuel sales.

During the April-June quarter, upstream firms shouldered one-third of state-run  oil marketing companies' over Rs 43,000 crore revenue loss on fuel sales.

Upstream firms contributed Rs 30,297 crore out of the total revenue loss of Rs 78,189 crore in the 2010-11 fiscal. Of this, ONGC's share was Rs 24,892 crore.