The petroleum ministry has turned down the disinvestment ministry's proposal to sell 25 per cent of the government's stake in the Oil and Natural Gas Corporation (ONGC) and the Indian Oil Corporation (IOC), and 15 per cent equity in the Gas Authority of India Limited (Gail).
This is on the grounds that the market cannot absorb divestment of this size.
In a communication to the disinvestment ministry, the petroleum ministry has said in case the government goes in for disinvestment in the three public sector oil and gas companies in one go, none of them will be able to fetch the desired price.
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It has also said past experience shows the market cannot absorb more than 10 per cent divestment in any company. In this case, big disinvestment in all the companies in one go can prove counter-productive.
The petroleum ministry has also argued even if the government divests its equity in these three companies one after another, there is every possibility that investors may keep away from one firm and wait for the next turn. Therefore, the petroleum ministry has said the government should take separate decisions on minimal disinvestment in these companies so that it gets the "right" price for its equity.
These apart, the disinvestment ministry has proposed a selloff ranging from 10 per cent to 25 per cent in two other blue-chip public sector undertakings