Govt plans to divest 5% stake in ONGC this fiscal
1-Jan-1970


THE government will divest a 5 per cent stake in ONGC during the current financial year, chairman RS Sharma told reporters on Tuesday. Sharma said the disinvestment would fetch Rs 13,000 crore for the government at the current share price. The ONGC scrip surged 0.24 per cent on the Bombay Stock Exchange on Tuesday to close at Rs 1,236.05. The Sensex fell 67.51 points on Tuesday.

The ONGC issue is likely to hit the market by February or March 2011, said Deepak Pareek, a research analyst at Mumbai-based Angel Broking. ?At present, inflation is very high. It is likely to come down at the end of the calendar year 2010. After that, the government may take a decision on partial or complete de-control of diesel,? Pareek explained.

Freeing diesel prices from the government control would take away uncertainties on subsidy sharing and increase profitability of ONGC, Pareek said. ONGC shares a major portion of the compensation given to oil marketing companies (OMCs) against losses incurred by them because of selling these products at government-regulated prices.

In the first quarter of the financial year, ONGC paid Rs 5,515 crore as subsidy to OMCs. It impacted the explorer?s net profit that dipped by 24.5 per cent.

At present, the government holds a 74.14 per cent stake in the country?s largest state-owned oil company. It proposes to sell 5 per cent or 10.6 crore equity shares through a follow-on public offer (FPO).

Finance minister Pranab Mukherjee has set a target to mop up Rs 40,000 crore through divestment of government stakes in public sector companies during this financial year. So far, stake sale in two companies ? Satluj  Jal  Vidyut  Nigam and Engineers India ? has fetched nearly Rs 2,000 crore. The process for divestment of stakes in Power Grid, Coal India, Hindustan Copper, Steel Authority of India and Manganese Ore (India) is under way.


Source: Financial Chronicle, Delhi, Wednesday, 11th August 2010
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