IOC, ONGC divestment by fourth quarter: Oil Secy

Says government expects to raise Rs 19,000 crore from the proceeds

The government expects to complete the Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC) divestments in this financial year itself and hopes to raise up to Rs 19,000 crore from the process. “We plan to complete the (divestment) process before the end of the financial year... (Hopefully) by the last quarter. Going by current market prices, we should raise up to Rs 18,000-19,000 crore,” Oil Secretary S Sundareshan told reporters here.

The government plans to sell a five per cent stake in ONGC and 10 per cent in IOC through the follow-on public offer, he said, adding that, in case of IOC, an additional mop-up of around Rs 10,000 crore is expected as the country's largest oil marketer will be raising 10 per cent more equity. He said the government plans to go ahead with the IOC divestment first and ONGC will follow.

The ministry has already asked IOC to scout for a merchant banker for the issue, while that of ONGC is yet to be finalised. “Merchant bankers for the IOC and ONGC issues will be appointed shortly and we will be working closely with the Ministry of Finance and the Department of Disinvestment,”Sundareshan said.

“IOC has a huge requirement for money. It will be using the proceeds of the sale for the Rs 29,000-crore Paradeep refinery,” he said.

No decision on Cairn-Vedanta yet
Sundareshan added the government was yet to take a view on the Cairn-Vedanta deal, as it was awaiting a reply from the British energy major on specific approvals involving 10 product-sharing contracts (PSCs) with the oil ministry.

“Cairn India has 10 PSCs with the government and, going by the nature of the proposed deal, it seems that all these will have to be specifically looked into. We have written to them, saying they should seek these approvals but, so far, there has been no response. As soon as the requests come, they will be examined on merit and a decision will be taken,” Sundareshan told reporters.

The secretary further said that, since the Cairn-Vedanta deal involved a change in ownership through a share sale as well as through sale of participatory interests, each of these PSCs had to be specifically examined. On August 16, the London-based mining major Vedanta Resources — owned by the billionaire NRI Anil Agarwal — had agreed to buy up to 61 per cent stake in Cairn India from Cairn Energy for a consideration of up to $9.6 billion. Cairn India is a three-way joint venture with Cairn, the domestic oil and gas major ONGC and Petronas of Malaysia.

At present, the Edinburgh-based Cairn Energy holds 62.37 per cent in Cairn India. It will sell a maximum of 51 per cent of its stake to Vedanta Group for $8.48 billion, and Vedanta will then go in for a $3-billion open offer for up to 20 per cent more stake. Petronas has nearly 15 per cent interest in the joint venture with the rest being held by ONGC.