 "IOC stake sale likely on March 14")
State-run ONGC Ltd and OilIndia Ltd (OIL) would pick up 5% stake each in IndianOil Corporation (IOC) at Rs 220 per share in an off-market deal likely on March 14.
As part of the divestment strategy, the finance ministry is looking to raise at least Rs 5,300 crore on this price. "Though there will be no lock in period for ONGC and OIL, if they have to sell these shares within a year's time, the companies will have to pay a higher capital gains tax of 33%.
The price of Rs 220 was decided based on 10% discount on the day in which the proposal (Rs 245 per share) was cleared or taking the six months average of share prices. In this case both were the same," said a senior petroleum ministry official.
On February 28, an empowered group of ministers headed by finance minister P Chidambaram had cleared the stake sale in IOC, at a discount of about 10%. It was following a letter written by ONGC and OIL demanding stake sale based on six month average traded price. ONGC currently holds around 8.77% stake in IOC.
According to experts, this would have a negative impact on the balance sheets of ONGC and Oil India, which is already bearing the subsidy burden. The government's decision comes on the back drop of a tug-off-war between petroleum ministry and finance ministry, as the former led by M Veerappa Moily raised it objections in selling IOC shares in markets "at a throw-away price."
IOC's stocks were seen up 3.41% at Rs 263.85 per share on Bombay Stock Exchange today. On the other hand, ONGC stakes too zoomed 2.91% to Rs 309 per share and OIL shares too closed 1.29% up at Rs 476.55 per share.