The government has no plans now to sell its shares in Oil and Natural Gas Corp (ONGC) and Indian Oil Corp (IOC) as ambiguous fuel pricing was affecting their valuations.
"At the moment there is no proposal (for follow-on public offers of ONGC or IOC)," Disinvestment Secretary Sumit Bose said today.
Oil Secretary S Sundareshan too stated that there was no plan "at this juncture" for FPOs in ONGC and IOC.
The Disinvestment Department had in December sought the oil ministry's comments on "public offerings from the government's shareholding" in ONGC and IOC.
The Oil Ministry, however, was of the view that raising funds from the capital market was not prudent till issues like fuel pricing and subsidies were resolved which were affecting share prices of ONGC and IOC, sources in know said.
IOC has been most affected by the 'ambiguous' fuel pricing and the uncertain mechanism to compensate retailers for losses on selling fuel below cost which was reflecting in its share price of Rs 305 considered highly under-valued.
The government has not allowed IOC and other retailers — BPCL and HPCL — to sell petrol, diesel, domestic LPG and kerosene at a price in line with the cost and has not compensated them fully for revenues lost on cooking fuel, they said.
ONGC is plagued by uncertainty on the net price it will realise on sale of crude oil as the government on ad-hoc basis asks it to make up for retailers' fuel losses. Also, revision in natural gas price has been long pending.
Sources said in view of the opposition by the Petroleum Ministry, FPOs were unlikely now.
Bose said only FPOs of Engineers India and Satluj Vidyut Nigam were currently under process.
The government owns 80.35 per cent in IOC and 74.14 per cent in ONGC and a follow-on public offer of up to 10 per cent each was under consideration.
Disinvestment Secretary had on December 8 sought to know from the oil ministry if ONGC and IOC had any requirement to raise equity from the capital market to meet their capital expenditure needs.
Both companies did not think it was the right time to go to the market, sources said. While IOC favoured debt over equity to meet the capex, ONGC said it had enough reserves to meet its requirement.
"In case the two companies do not require to raise funds from the capital market, we may kindly be advised if public offerings from the government's shareholding be considered," Bose had written.
However, the petroleum ministry was not in favour of any FPO other than that of EIL, which was likely in July-September quarter.
