IOC to sell one-third of its ONGC stake

ONGC to hold on to it's 9.1% equity in IOC.

Indian Oil Corporation is planning to fund its overseas acquisitions by off-loading one-third of its 9.6 per cent stake in Oil and Natural Gas Corporation (ONGC) during the current financial year.

IndianOil executives have said that the company plans to retail petroleum products in other countries by acquiring a stake in a downstream company. This process is expected to be completed in two-three months.

IndianOil is also aiming to complete its acquisition of a mid-size exploration and production company by January.

Based on yesterday's share closing price on the Bombay Stock Exchange, IndianOil's 9.6 per cent stake in ONGC has been valued at over Rs 13,500 crore. Its 4.8 per cent holding in GAIL (India) Ltd is valued at around Rs 1,000 crore.

ONGC, however, does not intend to sell its 9.1 per cent equity in IndianOil immediately. "We will not sell the IndianOil shares. We are looking at it as an investment," ONGC Chairman and Managing Director Subir Raha said on the sidelines of the Economic Editors' Conference. But he did not comment on the 4.8 per cent ONGC held in GAIL.

Based on yesterday's closing price on the BSE, ONGC's holding in IndianOil is valued at Rs 5,320 crore and in GAIL at Rs 1,041 crore. In turn, GAIL holds a 2.4 per cent stake in ONGC, valued at around Rs 3,400 crore.

In the absence of Petroleum Minister Mani Shankar Aiyar, the Cabinet Committee on Economic Affairs did not take up the issue of selling cross-holdings at its meeting today.

The government intends to empower the boards of the three oil companies to decide on selling shares in consultation with the finance and the petroleum ministries to ensure that the stock markets are not adversely affected.