ONGC withdraws stake sale prospectus

Decision on re-filing with the department of disinvestment.

Ending months of uncertainty, Oil and Natural Gas Corporation (ONGC) has withdrawn the papers it filed for sale of a five per cent stake by the government. The proposed sale would have raised Rs 12,000 crore and helped the government meet its Rs 40,000 crore annual disinvestment target.

Chairman and Managing Director Sudhir Vasudeva said, “This (withdrawal) is technical. The document filed in September had a validity of 90 days and so we have withdrawn it...It is no reflection if the follow-on offer (FPO) is coming or not.” The company’s shares on the Bombay Stock Exchange ended the day with a marginal decline of 0.16 per cent, to close at Rs 251.85.

“If and when required, we will file it again,” said Vasudeva, adding the timing would be decided by the government’s department of disinvestment.

ONGC had in September filed the papers for the FPO (formally known as a red herring prospectus) through which the government planned to sell a five per cent stake, or 427.77 million shares, in the company. The FPO was to open on September 20 but was put off days ahead of its opening, due to market uncertainty.

The government-controlled company had announced on September 16 that “the selling shareholder (government) has decided not to proceed” with the “offer programme” and “shall evaluate its decision in relation to the offer in due course”. Earlier this week, a senior petroleum ministry official had expressed doubt about the ONGC FPO sailing through in the current financial year.

However, the government is still hopeful of meeting its disinvestment target. Finance Secretary R S Gujral said, “The road map which envisages all alternatives has obviously been formulated. The target of Rs 40,000 crore has not been diluted. Clearly, the actual disinvestment is dependent on the market situation. It would be unfair that disinvestment should be done in a bad climate. But markets can improve any time. There is no reason to dispense with the target. The options have been multifarious and various options have been listed. Even if some of it flows to next year, it is not so sacrosanct.”

A stake sale in another government-owned oil company, Oil India Ltd (OIL), has been proposed. Petroleum Secretary G C Chaturvedi said his ministry had agreed to the department of disinvestment’s proposal for sale of a 10 per cent stake in OIL, the state’s second-largest state oil explorer after ONGC. “We have agreed for an FPO of OIL after the share sale in ONGC is completed,” he said. The government owns 78.4 per cent of OIL and a 10 per cent sale could fetch around Rs 3,000 crore. The timing is yet to be decided.