Ahead of government's plans to sell stake in oil companies, the Finance Ministry is considering to transfer some stake in disinvestment-bound PSUs to a separate company to insulate it from market volatility.
The move, if implemented, would help protect value of government shareholding from volatility in share prices resulting from external vagaries like oil prices, sources said, without divulging any further details.
The oil PSUs which are on the radar for disinvestment are ONGC, Indian Oil Corporation (IOC), Oil India (OIL) and Bharat Petroleum Corp Ltd (BPCL). The government could get around Rs 27,000 crore at current market prices by selling minority stakes in them.
While a 5 per cent stake sale in ONGC could fetch over Rs 12,000 crore, 10 per cent each in IOC and OIL would garner around Rs 10,000 crore and Rs 2,600 crore respectively. Besides, a 3 per cent stake sale in BPCL could fetch over Rs 2,000 crore.
The government has been wanting to divest 5 per cent stake in oil PSUs like ONGC for long. But it is unable to go ahead with it in absence of a subsidy sharing formula. As regards stake sale in IOC, the government has been waiting for the markets to stabilise.
The government had in 2014 planned to sell its 5 per cent stake in the state-run explorer but met with lukewarm response from foreign investors over lack of clarity on subsidy ONGC has to shell out every quarter.
ONGC and other oil producers have to bear a part of the losses that fuel retailers incur on selling LPG and kerosene at government-controlled rates. There is no formula to decide on their share and it is communicated on an ad-hoc basis every quarter.
