The government’s desperation to raise Rs 40,000 crore from disinvestment this year notwithstanding, the Oil and Natural Gas Corporation (ONGC) follow-on issue is nowhere on the horizon.
Though the petroleum ministry has conveyed its approval for a follow-on issue of Oil India Ltd (OIL), meeting the target without ONGC’s issue appears difficult. Besides, the ministry has said in its approval the market should stabilise before the government goes for the OIL issue.
A senior petroleum ministry official said the ministry had told the department of disinvestment the OIL issue could follow ONGC’s. “The decision on ONGC will be taken by the disinvestment ministry but the issue is not likely to happen this year,” he said. The ONGC issue could bring in nearly Rs 1,200 crore for the government.
Finance minister Pranab Mukherjee said, “I am not revising it (the target) right now. We have fixed the target and we will try to achieve it, but it depends on many other situations, particularly the economic health conditions... All these aspects have to be taken into account and the government will take a decision at the appropriate time.”
The government-controlled company had announced in a statement to the stock exchanges on September 16 that “the selling shareholder (government) has decided not to proceed” with the “offer programme” and “shall evaluate its decision in relation to the offer in due course”. The company did not give new dates for the issue but fresh preparations had begun last month.
The government has taken a decision to sell five per cent stake in ONGC. It plans to sell 427.77 million shares through the offer. After the issue, the government’s stake in ONGC will come down to 69.14 per cent from 74.14 per cent. The government owns 78.43 per cent in OIL.
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“Correspondence was going on for the last six months... We got the petroleum ministry’s in-principle approval yesterday for disinvestment in OIL. We have to work out the details,” said disinvestment secretary Mohammad Haleem Khan.
The total shares the government would sell in OIL was yet to be decided, he said, adding, “the process of inter-ministerial consultation is on.”
Senior officials said the government wanted to disinvest 10 per cent in OIL but that would fetch only Rs 3,000 crore. “They would need to depend on other companies even if along with ONGC, the government gets Rs 13,000-15,000 crore.”
Riding on a bumper Coal India IPO, the government had raised Rs 22,762 crore last year, giving it confidence to set a Rs 40,000 crore target this year. Difficult market conditions have, however, seen the government getting just Rs 1,145 crore so far.
Bigger disinvestment plan mooted
Even as the government is finding it difficult to raise Rs 40,000 crore from the disinvestment of public sector units this financial year, ICICI Securities has suggested a plan to mop up Rs 46,171 crore from the buyback of securities, strategic cross purchases and secondary sale of equity in these units in the immediate to the medium term. It put out a white paper on disinvestment, which suggested raising Rs 22,941 crore from monetising the portfolio of Specified Undertaking of UTI (SUUTI), besides looking for banks and insurance companies for possible sell-offs. A finance ministry official said the paper, released by finance minister Pranab Mukherjee, may not necessarily be government thinking.