Govt hasn't yet asked for share buyback: ONGC

State-owned Oil and Natural Gas Corporation (ONGC) today said it has not heard from the government on share buyback but hastened to add that all of its liquid cash is tied up in capital expenditure that would rise by 11% to Rs 31,000 crore next fiscal.

"We have not been asked to do any such thing [buyback shares]," ONGC Chairman and Managing Director Sudhir Vasudeva said.

Stock repurchase or share buyback is the reacquisition by a company of its own stock. The government is asking cash-rich public sector firms to buyback shares so as to meet its disinvestment target.

Vasudeva, however, said it was a myth that ONGC had a cash surplus of Rs 27,000 crore. After accounting for the dividend it has to pay and Rs 8,200 crore set aside in a site restoration fund with State Bank of India, the liquid cash with ONGC was only Rs 14,000 crore, he said.

 

Site restoration programme is for properly plugging and abandoning orphan oil or gas wells and to restore sites to approximate pre-wellsite conditions suitable for redevelopment.

"Our capital expenditure next fiscal is Rs 31,000 crore, all of which is to be met from internal resources. Given the size, we may have to dip into our cash reserves," he said.

The capex for 2012-13 is higher than Rs 28,000 crore capital expenditure for 2011-12.

ONGC is investing heavily to maintain output from its old fields as it targets a 15% rise in crude oil production to 28 million tonne by March 2014.

The company produced 24.418 million tonnes of crude oil in 2010-11, which is projected to dip to 23.735 million tonne this fiscal. The output would rise to 25.045 million tonne in next and to 28.27 million tonne in 2013-14.

ONGC, which produced 23.095 billion cubic metres (bcm) of gas in 2010-11, is targeting 38.676 bcm of gas production by 2016-17. Output this fiscal is likely to be 23.458 bcm which would rise to 28.215 bcm by 2015-16 before the real jump in 2016-17 when its eastern offshore Krishna Godavari basin fields come on production.

Vasudeva said the government has to decide on the timing of the long-delayed follow-on public offering (FPO) of the company.

The government plans to sell its 5% stake, or 427.77 million shares, in the company through the FPO. The government's holding would come down to 69.14% from the current 74.14% after the share sale.