Govt to offload 10% stake in IOC

NEW DELHI, FEB 4: Encouraged by the market response to the decisions of the Cabinet Committee on Disinvestment (CCD) on Thursday, the government is contemplating offloading of 10 per cent of its stake in Indian Oil Corporation (IOC). Sources in the department of disinvestment (DoD) said that the market reaction has boosted the morale of the department. PSU stocks went up quite sharply on Friday, including those of oil PSUs. It stands to reason that the government might offload 10 per cent equity in IOC, the sources said.

It may be recalled that the government had targetted IOC for offloading its 10 per cent shares for this fiscal. However, this got stalled because the government felt that the market condition was not very conducive for selling equity. However, even if the government decides to sell 10 per cent shares in IOC, it may not be possible this fiscal, the sources said. Sources also pointed out that though they were confident of good returns on the 10 per cent equity sale, the fact that it is minority stake sale may not go down well with the investors. For, unlike the strategic sale of Videsh Sanchar Nigam Ltd, CMC Ltd and Balco, for which decisions were taken at the Thursday’s CCD meeting, in the case of IOC it is not a strategic alliance. Despite this, however, the DoD may decide to sell 10 per cent shares in IOC.

At present, the government holds 81.14 per cent stake in IOC. While, 18.74 per cent shares have been sold so far, the rest of the holding is with the state governments and other collaborators. So far, the government has realised Rs 2,298.65 crore, excluding the divestment carried out in 1991-92.

In the case of IOC, the DoD cannot do more than minority stake sale, for there is a consensus within the Cabinet that government holding in IOC, Oil & Natural Gas Corporation (ONGC) and Gas Authority of India Ltd (GAIL) would not be brought down below 51 per cent. This effectively rules out full-scale privatisation, along with handing over of management control to the strategic partner.