The empowered group of Ministers (eGoM) headed by Finance Minister P. Chidambaram is likely to discuss two options for ONGC and Oil India picking up equity in Indian Oil Corporation as part of the Government's disinvestment programme. The meeting is likely to take place on Thursday.
In the first option, Oil India would pick up 7 per cent stake, while ONGC would buy 3 per cent equity. This is because ONGC doesn’t have enough room to spend cash reserves at a time when it is burdened with heavy oil subsidy bill, sources said.
The second option is where both the public sector explorers would pick up 5 per cent stake each in IOC.
On Sunday, Petroleum Secretary Vivek Rae had said that the Government is looking at the option of ONGC and Oil India picking up 10 per cent stake in Indian Oil.
The Government is keen to sell 10 per cent stake in IOC to garner about Rs 4,600 crore. The company’s stock closed at Rs 208.95, up 1.46 per cent on the BSE on Wednesday.
This option is being considered at a time when the Petroleum Ministry has expressed reservation on offer for sale through stock exchange for divesting stake in Indian Oil. It feels that stock prices have almost halved in 5 years and any further offloading in the market will depress share prices.
There will be no lock-in period for shares if transferred through the proposed route. It means that when investors want money for capital expenditure, they can sell the shares any time.
The Department of Disinvestment will have to go into whether this share sale method complies with SEBI guidelines, the Secretary had said.
The Government has fixed a target of Rs 40,000 crore through disinvestment in Central Public Sector Undertakings. However, so far it has managed to get less than Rs 3,000 crore.