In-principle nod for ONGC stake sale

An empowered group of ministers (EGoM) on disinvestment, headed by Finance Minister Pranab Mukherjee, on Wednesday agreed in principle for auction of a five per cent share in the Oil and Natural Gas Corporation (ONGC).

A senior official told Business Standard the EGoM was slated to take a decision in the next meeting on a floor price for the auction, which could fetch the government about Rs 12,000 crore.

Minister for Petroleum and Natural Gas S Jaipal Reddy said after the meeting, “The government is considering the auction route for ONGC disinvestment. No time line fixed as yet. The EGoM is to shortly meet again.”

Disinvestment in Bharat Heavy Electricals Ltd (BHEL), however, seems set to take place only in the next financial year. Heavy Industries and Public Enterprises Minister Praful Patel, part of the panel, said: “No decision on BHEL disinvestment has been taken. It may happen next financial year.”

A stake sale in ONGC through auction, with preferential allotments of public sector units’ shares to financial institutions like Life Insurance Corporation (LIC), are being targeted by the government to reach as close as possible to the Rs 40,000-crore budget target for disinvestment in 2011-12.

It has so far garnered only Rs 1,144.55 crore, through a stake sale in Power Finance Corporation earlier in the financial year.

The target of Rs 40,000 crore, according to Disinvestment Secretary Mohammad Haleem Khan, “is now almost impossible (to meet)”. He said a final picture on funds from disinvestment in the current financial year would emerge after the next EGoM meeting.

The government is hopeful that some disinvestment in National Building Construction Corporation (NBCC) will also get completed in the current financial year, fetching about Rs 250 crore.

In the case of BHEL, the proposal is to offload 10 per cent government stake in the state-owned company to garner around Rs 2,500 crore.