The Hindu Business Line : Oil PSUs get in-principle nod to offload cross holdings

INDIAN Oil Corporation, Oil and Natural Gas Corporation and GAIL (India) Ltd today moved a step closer towards offloading their cross-holdings in each other.

The Ministry of Petroleum and Natural Gas has given an in-principle approval to the request of the state-owned oil and gas companies to offload their cross-holdings in each other.

According to official sources, the proposal will now go to the Union Cabinet for clearance. Explaining the need for a Cabinet approval on a non-policy matter, sources said this was required because the companies had bought stake in each other at the direction of the Cabinet.

To decide on the matter, the Petroleum Minister, Mr Mani Shankar Aiyar, held a high level meeting with the companies as well as Government representatives here on Monday morning.

About the process of offloading, sources said the exact methodology of untangling the cross holdings would be decided by the companies, but the stakes would not be offloaded at one go.

The companies can either directly sell their stakes in the market or opt for the buyback route. The companies have been seeking permission to sell their stakes for various reasons, including meeting their increased working capital requirement and investment needs.

The move gains significance in the context of some of the petroleum companies suffering net losses in the first quarter of the current fiscal and needing the capital. IOC has been pushing for offloading its 9.61 per cent holding in ONGC. In 1998, IOC, ONGC and GAIL had purchased part of the Government holding, now worth Rs 22,000 crore, in each other to help reduce the fiscal deficit.

ONGC and IOC own 4.83 per cent each in GAIL. GAIL, in turn, owns a 2.4 per cent stake in ONGC. While, ONGC has 9.11 per cent stake in IOC, the latter's 9.61 per cent share in ONGC represents 137.06 million shares worth Rs 13,000 crore.

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