At current rates, the unlocking of cross-holdings is expected to fetch more than Rs 14,000 crore for the oil companies.
The petroleum ministry is learnt to have said in the current decontrolled scenario, the cross-holding has no utility and, therefore, it should be offloaded in the stock market during the current buoyancy period .
The revenue from the offloading would go the individual companies and not the general exchequer. The ministry has said the move will improve the liquidity position of the oil companies.
Normally no Cabinet approval is required by Navratna companies for such an action. But in this case, the petroleum ministry thought it fit to approach the CCEA since the decision to have the cross-holding was done with the Cabinet approval in 1998.
Indian Oil Corporation (IOC) has a 9.6 per cent stake in Oil and Natural Gas Corporation (ONGC) and a 5 per cent holding in Gail (India) Limited. ONGC in turn has a 10 per cent stake in IOC and a 5 per cent stake in Gail. Gail has a 2.4 per cent stake in ONGC.
The unlocking of the cross-holdings at current rates will yield around Rs 2,000 crore for ONGC, Rs 9,500 crore for IOC and Rs 2,500 crore for Gail.
The cross-holdings were forced on the oil companies in 1998 when the government wanted to raise resources to bridge the fiscal deficit. The three oil companies had to shell out a total of Rs 4,643 crore to buy share in each other.
