In a move which would enable the government to meet the disinvestment target for this financial year, the government on Tuesday decided to divest 10 per cent equity each in two oil PSUs ONGC and Gail. The process is expected to yield around Rs 12,400 crore. The move is in keeping with a proposal earlier mooted by the petroleum ministry.Announcing the decision taken at the meeting of the Cabinet Committee on Disinvestment (CCD) chaired by Prime Minister, Disinvestment Minister Arun Shourie told reporters that “market is buoyant and the Prime Minister and the finance minister wanted retail investors to share the buoyancy in the market.”The equity sale in the domestic market would be completed during the current financial year and an inter-ministerial committee comprising ministers of finance, law, petroleum and disinvestment would take day-to-day decisions including procedural issues and quantum of equity to be earmarked for retail investors.In case, the government is faced with a situation whereby it is not able to offload the entire 10 per cent equity in the domestic market due to lack of depth, it would consider overseas route. In such a situation, the committee of ministers would approach the CCD with a fresh proposal.According to Shourie, the government would be able to bridge the shortfall in its disinvestment target for the year which stands at Rs 13,200 crore. Till date, the government has been to able to garner only Rs 1,300 crore as disinvestment proceeds. The government at present holds 84.11 per cent in ONGC and 67.35 per cent in Gail. Remaining of the shares are held by other institutions. The paid up capital of ONGC is Rs 1,425.93 crore while that of Gail is Rs 845.60 crore. At present, the total value of the shares of the two companies available for offloading has a market value of Rs 12,443.01 crore. While the value of ONGC’s shares work out to Rs 10,666.5 crore that of Gail works out to Rs 1,776.6 crore.Since, the government would lay thrust on offloading the 10 per cent stake in the two oil PSUs, the dilution of the cross-holding of ONGC, IOC and Gail would now take a backseat. According to sources, the government does not want a situation whereby the market is flooded with oil scrips. Hence, the dilution of the cross holding would come at a later stage after the 10 per cent equity in ONGC and Gail is offloaded in the market.The decision assumes importance in the wake of Supreme Court verdict staying privatisation of oil PSUs HPCL and BPCL till parliamentary approval was granted. While the government has sought a review of the decision in the Supreme Court, the CCD’s decision was perceived as an effort to break the disinvestment deadlock. Asked about the progress on sale of government’s residual shares in privatised companies, Shourie said Disinvestment Secretary Dhirendra Kumar had met Sebi chairman G. N. Bajpai earlier in the day to work out the schedule. Partial divestment in IOC, which was also being discussed earlier, did not figure in the meeting.According to sources, due to shortage of time, the disinvestment ministry had asked the petroleum ministry to prepare the Cabinet note on offloading 10 per cent equity in the two oil PSUs.
