IOC yet to get nod for sale of stake in ONGC

Aiyar in favour of selling the equity back to ONGC.

Indian Oil Corporation is yet to decide on whether it would go in for a total sale of its equity share in upstream major Oil and Natural Gas Corporation or resort to sale in tranches.

IOC chairman S Behuria told Business Standard that the company would take a decision depending on its cash flow requirements.

He said that the company had recently sought the government permission to sell its holding in ONGC but the exact manner and the timing would be decided later.

The company had made a similar request earlier but with the government setting up a committee for restructuring of oil sector PSUs, the decision was put off. "We are trying to take advantage of the (stock) market conditions," Behuria said.

He said there were various reasons for going in for sale including meeting the increased working capital requirement and investment needs of the company.

Senior officials told Business Standard that the ministry of petroleum and natural gas would examine the proposal in the light of recommendations of the synergy in energy committee report.

'The ministry is yet to take a decision on how IOC should be allowed to sell the stake,' said the official adding that minister of petroleum Mani Shankar Aiyar was in favour of selling the equity back to ONGC in which case the company would extinguish 137.06 million shares held by IOC.

IOC holds 9.61 per cent in ONGC. Going by the market value, sale of IOC's entire holding in ONGC would fetch more than Rs 12,000 crore.

'There are various options being examined and selling it in the market is one of the options,' said the official. PSU oil companies were asked to buy share in the companies In 1998 through a Cabinet on crossholding and therefore a Cabinet approval to undo this would be required though the companies could sell the equity after seeking the ministry approval.

ONGC, IOC, and GAIL (India) Ltd had purchased part of government's holding in each other to help reduce fiscal deficit.

ONGC has a 9.11 per cent stake in IOC while IOC and ONGC hold 4.83 per cent each in Gail which in turns owns a 2.4 per cent stake in ONGC.

TALLY MATCH

IOC holds 9.61% in ONGC

Sale of IOC's holding to fetch more than Rs 12,000 crore

ONGC has a 9.11% stake in IOC

IOC and ONGC hold 4.83% each in Gail

Gail owns a 2.4% in ONGC