The move will fetch the Centre Rs.24,000 cr

In a big boost to the disinvestment programme of the UPA-II Government, the Petroleum and Natural Gas Ministry on Monday gave its green signal to the sale of government's stake in Oil and Natural Gas Corporation (ONGC) and Indian Oil Corporation (IOC), a move aimed at raising around Rs.24,000 crore this fiscal.

IOC will be the first to be disinvested followed by ONGC. Along with the 10 per cent government stake sale, the company will make a follow-on public offer (FPO) of its 10 per cent expanded equity to raise close to Rs.9,000 crore for part-financing its capital expenditure.

The ONGC issue, in which the government would offload 5 per cent stake, would follow the IOC offer. But before its FPO, the company is likely to come out with a bonus issue and stocks split, Petroleum Ministry officials said.

The stake sale comes following the approval granted by Petroleum and Natural Gas Minister Murli Deora to the proposal of the Finance Ministry in this regard, according to a senior official.

The Committee of Secretaries (CoS) had on August 17 included the two companies in the list of PSUs that had been short-listed for disinvestment this fiscal.

It had directed the Ministry to obtain approval from the Appointments Committee of Cabinet for selecting non-official directors on the boards of ONGC and IOC so that the disinvestment process was not hampered due to non-appointment of independent directors.

At present, IOC and ONGC do not meet Securities and Exchange Board of India's norms that half their boards would be made up of non-official or independent directors. The proposal is for sale of 5 per cent or 10.6 crore equity shares in ONGC through a follow-on public offer (FPO), which at Monday's trading price of Rs.1,359 would fetch the government Rs.14,405 crore.

Post-stake sale

Post-stake sale, the government's shareholding in ONGC will come down to 69.14 per cent from 74.14 per cent. In IOC, the divestment and stake sale would reduce the government holding from 78.92 per cent to 64.57 per cent.

IOC had already written to the Oil Ministry expressing its interest in raising money from the market for its capital investment requirement, the official said.

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