The Petroleum and Natural Gas Ministry is likely to take a final call next week on the issue of off-loading the shares of state-run Indian Oil Corporation (IOC), with the view that upstream oil companies Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) could possibility pick up the 10 per cent stake in IOC and sell it later at profitable prices.
An Empowered Group Of Ministers (EGoM) headed by Finance Minister P. Chidambaram will meet sometime next week to decide on the issue. In the late 90s, the government allowed public sector oil companies and Gas Authority Of India Ltd to go in for cross-holding of shares in each other raising Rs 4,643 crore through this route.
This option is being discussed between the Petroleum and Finance Ministries to put an end to the impasse over the disinvestment of IOC which has become a contentious issue between the two entities. While the Petroleum Ministry is strongly opposing the sale of IOC stake on the grounds that the market price of the scrip was low due to choppy market conditions, the Finance Ministry is keen to notch up closer to its disinvestment target of Rs. 40,000 crore provided in the budget.
“What is being examined is if ONGC and OIL can buy the government’s stake in IOC. The Finance Ministry is saying that give us Rs. 4,600 crore either by way of disinvestment, cross--holding or special dividend. They have no particular objection to IOC shares being bought by ONGC or OILl,” Vivek Rae, Petroleum Secretary, remarked.
The EGoM on January 9 had deferred its decision on the 10 per cent stake sale of IOC in the face of staunch opposition from the Petroleum Ministry over pricing of the 19.16 crore shares. This is less than the investment that IOC is putting in setting up a 15 million tonne refinery in Odisha, according to the petroleum ministry.
