Decision on ONGC, BHEL stake sale route likely today

The government is looking at all possible options to drive disinvestment in what remains of the financial year, in a hope to minimise the shortfall in its Rs 40,000-crore target.

After an eight-month lull because of sluggish market conditions, the disinvestment process may restart with government stake sales in Oil and Natural Gas Corporation (ONGC) and Bharat Heavy Electricals Limited (BHEL). A Group of Ministers (GoM) headed by Finance Minister Pranab Mukherjee is slated to take a decision on the stake sale route for ONGC and BHEL tomorrow.

Disinvestment in the two blue-chip companies may fetch the government about Rs 14,500 crore.

The government succeeded in garnering only Rs 1,144.55 crore in May 2011 from a stake sale in Power Finance Corporation.

On the table are options ranging from roping in financial institutions such as the Life Insurance Corporation to pick up government stakes in public sector enterprises to possible auctions. Petroleum minister S Jaipal Reddy, also a GoM member, said on Tuesday, “The GoM is to meet tomorrow to consider proposals relating to disinvestment in ONGC.”

SIGNING THE SALE OF ANOTHER SLICE

* GoM to decide on ONGC, BHEL stake sale route today

* Around Rs 14,500 crore expected to be fetched through auction

* LIC ready with Rs 12,000 crore to pick up stakes through 
private placements

* NBCC’s FPO likely to go through before March 31

* Disinvestment target for the financial year is Rs 40,000 crore 

* Only Rs 1,444.55 crore garnered so far this financial year

The GoM is set to consider selling five per cent government stake in ONGC, which according to disinvestment department officials, could raise about Rs 12,000 crore through the auction route.

The government owns 74.14 per cent stake in ONGC and plans to sell 427.77 million shares, which would reduce its holding in the company to 69.14 per cent.

“This may perhaps be the last (GoM meeting) before the Budget,” Reddy said. The minister, however, refused to hazard a guess on what the GoM’s decision could be.

Disinvestment secretary Mohammad Haleem Khan said the GoM would also decide on selling stake in BHEL. “We will consider all routes allowed under Securities and Exchange Board of India guidelines,” he said.

The Cabinet has approved disinvestment of five per cent of the government shareholding of 67.72 per cent in BHEL by way of a follow-on public offer. It has also approved five per cent and 10 per cent disinvestment in Steel Authority of India Limited and Hindustan Copper Limited, respectively.

The government is looking at both market and direct sale modes such as bulk sale and buybacks. It has already allowed LIC to increase stake in public sector entities beyond the 10 per cent cap. LIC is slated to pick up five per cent stake in more than a dozen public sector banks through a preferential allotment of shares.