The controversy surrounding the ONGC shares auction has kicked up an opposition within the government with the Petroleum Ministry refusing a 10 per cent disinvestment in Oil India Ltd (OIL) through a similar offer for sale on stock exchange or the auction method.
In reply to the draft note for Cabinet Committee on Economic Affairs on disinvestment of Oil India Ltd (OIL),the ministry has suggested that the OIL disinvestment be deferred due to lack of auction experience.
The Petroleum Ministry has informed us that the issue be deferred until we study more examples of offer for sale in the Indian context, said an official of the Department of Disinvestment.
They have asked us to evaluate,and based on lessons learnt,suggest a suitable mechanism for disinvestment on OIL,subject to favourable market conditions, he added.
OIL was among the three state-run public sector enterprises Neyveli Lignite Ltd and Hindustan Copper Ltd being the other two which the DoD had put on the block starting June.
It had suggested 10 per cent share sale in OIL through offer for sale to lower the government holding to 68 per cent. Though the asking price was to be decided later,the ballpark revenue figure was estimated at Rs 3,000 crore,said the DoD official.
Last month,the Finance Ministry forced a five per cent share auction in Oil & Natural Gas Corp to raise nearly Rs 12,000 crore to partly meet the disinvestment target for fiscal 2011-12.
The process was jeered when the auction failed to attract institutional investors forcing the government to direct state-run Life Insurance Corp to pick up a large stake.
Buyback of shares by central public sector enterprises and allowing cash-rich CPSEs,LIC and public sector banks to buy 10 per cent equity of other public sector companies were approved by the CCEA almost the same time on March 2 with DoD getting an enabling provision to handle the deals.
But in these cases,the sale price is to be market-determined,based on the formula for a preferential issue as per Sebi norms,and could be undertaken during bearish market conditions through the DoD.