Govt to offload 10 in IOC after budget

CALCUTTA, JAN 22: Petroleum and Natural Gas Minister Ram Naik today said that the government has decided to wait till the next Union budge...

CALCUTTA, JAN 22: Petroleum and Natural Gas Minister Ram Naik today said that the government has decided to wait till the next Union budget for making 10 per cent disinvestment in the Indian Oil Corporation as recommended by the Disinvestment Commission and would go in for it after March.

Naik told a press conference here that the commission had recommended that the government should disinvest 10 per cent equity in IOC before March 2000. But since IOC is a Fortune 5008242; company, the government has decided to wait for an appropriate time after the budget when it would get the best price in the market.

So far the government had only disinvested in GAIL which fetched Rs 945 crore to the national exchequer, he said.

ADR ISSUE: Indian Oil Corporation has planned to get itself listed on the New York Stock Exchange during the next six months. Work in this direction, especially as regards the revised accounting norms to GAAP generally accepted accounting principles and formally applying to the Securities Exchange Commission of the US, has already begun and the corporation expects to have the listing finalised by August.

IOC is already going in for a 550 million GDR issue in March, the proceeds of which could be converted into ADRs by the time the listing is done. The corporation will then comfortably go in for another ADR issue in 2000-01 which sources say could be in the range of around a billion dollars.

The advantages accruing from an NYSE listing are a larger investor base which facilitates easier access to funds. quot;There are various mega projects underway which would require substantial resources. IOC will be able to do this effectively once an NYSE listing is done,quot; sources said. They added that a bigger market would result in greater trading in the IOC scrip and consequently boost its price. The Fortune 500 company will become the second PSU after Mahanagar Telephone Nigam to consider an ADR issue.

Government holding in IOC is presently 81 per cent which will be down to 71 per cent after the GDR scheduled for March. Last January, the ONGC had bought ten per cent of the Centre8217;s stake in IOC for Rs 1,700 crore in a cross-holding deal which saw the latter also subscribe to 10 in ONGC.

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IOC8217;s plans to go for a NYSE listing stem from the fact that it has drawn up a series of new projects in the Ninth Plan apart from expansion of existing ones. The overall outlay is in the range of Rs 26,000 crore. The corporation has also entered into a strategic alliance with ONGC to work in key petro-related areas like exploration amp; production, power, petrochemicals etc. All these are capital-intensive plans which will involve large funding, possible only through an ADR issue.

The corporation8217;s GDR issue, slated for March, has been on the cards for over three years now. It was initially shelved owing to the oil pool crisis which saw the oil major8217;s dues rising to a mammoth Rs 10,000 crore. IOC, at that stage, was compelled to seek deferred credit for crude purchased from ONGC which worked out to Rs 1,700 crore. If the GDR issue had gone through as planned, the next step was to go in for a ten per cent public offering which, at that time, would have raked in at least Rs 2,000 crore. Even after the pool crisis was solved through the issue of oil bonds, the changes in government only delayed plans to hit the international market.

Even this time around, there have been reports doing the rounds that investor appetite for the IOC scrip could be affected as Sinopac of China, a large integrated oil company, made its global offering this month.