Public sector upstream oil companies Oil
and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) are likely to buy the 10-per cent government stake in downstream Indian Oil Corp
(IOC) to resolve the impasse between the petroleum and finance ministries over offloading the shares in the stock market when the price of the scrip is very low.
"What is being examined is if ONGC and Oil can buy the government's stake in IOC," petroleum secretary Vivek Rae told journalists on the sidelines of the Petrotech 2014 Conference here.
While the finance ministry is keen expedite the disinvestment aiming to reduce the increasing fiscal deficit, the petroleum ministry has been staunchly opposing what it sees as a "distress sale". "The finance ministry says, 'Give us Rs 4,600 crore either by way of disinvestment, cross- holding or special dividend.' They have no particular objection to IOC shares being bought by ONGC or Oil," Rae explained.
An empowered group of ministers headed by Union finance minister P. Chidambaram will meet this week to look at alternatives to meet the disinvestment target. In the late 90s, the government allowed public sector oil companies and Gas Authority Of India Ltd to go in for cross- holding of shares in each other raising Rs 4,643 crore through this route.
The EGoM on January 9 had deferred its decision on the 10 per cent stake sale of Indian Oil Corporation ( IOC) in the face of staunch opposi- tion from the Petroleum Ministry over pricing of the 19.16 crore shares.
A group of ministers headed by Chidambaram on Thursday postponed decision on disinvestment in IOC and will meet again next week.
The petroleum ministry had pointed out that the IOC scrip was currently trading at a mere Rs 198.95 per share, which is way lower than the 52- week peak of Rs 375 reached on January 18 last year. At IOC's share price of Rs 198.95 on Thursday, the market capitalisation works out to less than Rs 30,000 crore.
This is less than the investment that IOC is putting in setting up a 15 million tonne refinery in Odisha, according to the petroleum ministry.
Courtesy: Mail Today