Petroleum Ministry approves 5% stake-sale in ONGC

Govt has suggested resolution of a few issues, including fuel subsidy mechanism and gas pricing policy, to enable better price realisation from such disinvestment, says Sitharaman

Petroleum Ministry has accorded in-principle approval for 5% stake-sale in ONGC which may fetch the government about Rs 18,000 crore to meet disinvestment target for the current fiscal.

"Ministry of Petroleum and Natural Gas has agreed in-principle to the proposal of disinvestment of 5% government stake in ONGC," Minister of State for Finance Nirmala Sitharaman said in a written reply to the Rajya Sabha.

"ONGC, while supporting disinvestment of this equity held by government of India, has suggested resolution of a few issues, including fuel subsidy mechanism and gas pricing policy, to enable better price realisation from such disinvestment," she said.

As per the Budget 2014-15, the disinvestment target is Rs 58,425 crore including receipts from disinvestment of government stake in the non-government companies.

Meanwhile, the Department of Disinvestment (DoD) has kickstarted the process of stake sale in ONGC and invited bids for appointing merchant bankers to manage the share sale.

The merchant bankers would advise the government on the timing and the modalities of the offer for sale (OFS) and ensure best return to the government.

The DoD will appoint up to five merchant bankers to manage the OFS.

Sitharaman said disinvestment of Coal India and ONGC will be subject to approval of CCEA.

The actual realisation from government equity sales in these companies would depend on market conditions and investors interest prevailing at the time of actual disinvestment, she added.

The government is looking to sell 5% stake in SAIL and 10% each in RINL and HAL in the current fiscal.

The disinvestment public offer (IPO) in Rashtriya Ispat Nigam Ltd (RINL) is "tentatively scheduled for completion in the current financial year", she said.

Sitharaman further said that the Cabinet has already approved 10.82% stake sale in SAIL and an IPO of 10% of stake in each of RINL and Hindustan Aeronautics Ltd (HAL).

Further, the Cabinet has also approved sale of residual government equity in Hindustan Zinc and Balco.

In the Budget, the government has estimated to collect Rs 43,425 crore from selling stake in PSUs and another Rs 15,000 crore from sale of residual stake in the erstwhile government companies.