Seeking to open the big ticket window of disinvestment, the government has proposed to raise Rs.21,000 crore through the sale of 5 per cent government equity in Oil and Natural Gas Corporation (ONGC) and 10 per cent in Indian Oil Corporation (IOC) in the current fiscal.
Petroleum and Natural Gas Ministry sources said a note was being prepared for the approval of Petroleum Minister Murli Deora and the formal Cabinet note for approval by the Council of Ministers would be prepared by the Department of Disinvestment. This comes close on the heels of the letter by Investment Secretary Sumit Bose to the Petroleum Ministry asking it to initiate the process of disinvestment in this fiscal itself.
Officials said IOC would be the first to be disinvested but only after it makes an initial public offer of 10 per cent to raise Rs.9,500 crore for part-financing its capital expenditure programme estimated at Rs.75,000 crore.
This would be followed by sale of 10 per cent government holding amounting to 19 crore shares to raise Rs.7,600 crore. Similarly, ONGC will disinvest 5 per cent stake to raise about Rs.13,000 crore at the current market price of Rs.1,233 a share. The government now holds 74.14 per cent in the oil major which would come down to 69.14 per cent after disinvestment.
The reforms in the petroleum sector seems to have triggered off the decision to make the stake sale especially after the government has set an ambitious target of raising Rs.40,000 crore through the disinvestment process to raise money for the social security and flagships schemes of the UPA Government.
IOC has written to the Petroleum Ministry expressing its interest in raising money from the market for its capital investment requirement.