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Following stiff opposition from the petroleum ministry against divesting state-run Indian Oil Corporation (IOC), the Centre is now exploring ways to sell IOC stake to other state-owned companies such as Oil and Natural Gas Corporation (ONGC) and Oil India Limited to meet the divestment target.
A proposal in this regard would be moved to an empowered group of ministers (EGoM) soon, said a top petroleum ministry official.
The EGoM led by Finance Minister P Chidamabaram had deferred a decision on the divestment of IOC last week. The petroleum ministry had raised its concerns against going for dis-investment thrice in the past two months, following a lukewarm response from investors after roadshows abroad and home.
A proposal in this regard would be moved to an empowered group of ministers (EGoM) soon, said a top petroleum ministry official.
The EGoM led by Finance Minister P Chidamabaram had deferred a decision on the divestment of IOC last week. The petroleum ministry had raised its concerns against going for dis-investment thrice in the past two months, following a lukewarm response from investors after roadshows abroad and home.
“The finance ministry says give us Rs 4,600 crore either by way of disinvestment, cross-holding or special dividend. This would help the government to meet its dis-investment target. At the same time, the PSUs that may buy into the company can exit as and when required as there would be no lock in period,” the official added.
During the international roadshows, major funds like J P Morgan, Templeton, T Rowe Price, Wellington Management, Aberdeen Asset Management and Schroders refused to meet the IOC team or did not show any interest on IOC. IOC too had raised it objections to the finance ministry in this regard.
Government had earlier also resorted to cross-holding to shor up revenues, through ONGC, GAIL and IOC.
On Friday, IOC shares closed at Rs 200.35 per share, taking its market cap to Rs 48,644 crore. The government currently holds 78.92% stake in IOC. The department of disinvestment had already fixed five merchant bankers — including HSBC, UBS Securities, SBI Capital, J M Financial and Citibank — to manage the stake sale process.
Petroleum ministry was of the view that the share prices have taken a beating due to policy measures like lack of clarity on export parity pricing and also subsidy sharing and the finance ministry should solve this before going for a stake sale. Finance ministry was in favour of export parity pricing compared to the current import parity pricing regime.
Export parity price is the benchmark free-on-board price of the products, import parity pricing includes import duty and various expenses such as freight and insurance incurred to import products to Indian ports.
