Indian Oil Floats Put Off To August

A partial sell-off of the governments stake in Indian Oil Corp through the issue of global depository receipts (GDRs) and a domestic issue has been put off till August this year, a government official said on Tuesday.

The core group on disinvestment has approved the proposal by joint global coordinators to defer the GDR issue till August, the official, who declined to be identified, told Reuters.

He said the domestic issue will be taken up at about the same time as the GDR issue.

In November, the Union cabinet approved a cut in the states stake to 77.9 per cent from 91.3 per cent.

The coordinators to the sale Credit Suisse First Boston and Goldman Sachs had advised the core group that a GDR issue by IOC would not be successful unless the commitment of the new government in continuing the reforms in the oil and gas sector are known, the official said.

The Gujral government approved a phased decontrol of the petroleum sector on November 20, a week before it was ousted.

The reform package includes dismantling of the decades-old administered pricing mechanism (APM) for petroleum products and the introduction of lower custom and excise tariffs on crude oil and products.

The reform package is to be implemented from the next financial year 1998/99 (April-March), by which time the new government is expected to be in place.

In case the new government decides in April to pursue the reforms, investors would need to be provided with IOCs 1997/98 financial results, cashflows and projections for a good response to the issue.

This would also push back the (disinvestment) programme since the latest annual report (of IOC) is possible only in July, the official said. The coordinators have also underlined the need to study the effect of APM phase-out on the refining margins and marketing profits of IOC, the official said. For this, some time would be required before the reform can be implemented and its effect known, he said. The third reason for the postponement was the delay to the opening of IOCs refinery at Panipat.