The Hindu Business Line : IOC proposes part sale of ONGC, GAIL holdings

INDIAN OIL has proposed an immediate sale of a part of its holdings in both ONGC and GAIL (India) Ltd to the Union Ministry of Petroleum and Natural Gas.

Though the proposal is yet to be cleared by the Centre, the company is hopeful of going ahead with the issue by March. According to the current market prices, the total issue size is expected to be close to Rs 3,500 crore.

IOC has received board approval for selling 20 per cent of its 9.6 per cent stake in ONGC and up to 50 per cent of the 4.83 per cent stake in GAIL. Proposed to be sold through the block deal route to avoid long-term capital gains tax, the exact size and date of issue will be decided following the Government's approval.

"We have submitted a firm proposal for selling the stake in both ONGC and IOC to the Union Government. The proposal is awaiting approval of the Centre, following which we will decide on finer details. However, we are hopeful to go ahead with the issue this fiscal," IOC's Director (Finance), Mr S.V. Narasimhan, told Business Line.

At current prices, IOC's stake in ONGC and GAIL is worth close to Rs 15,000 crore and Rs 1,120 crore, respectively.

ONGC holds a 10 per cent stake in IOC and 4.83 per cent in GAIL. The latter holds 2.35 per cent in ONGC. Though ONGC had also received a board approval for selling its holdings in IOC and GAIL, the company had not submitted any firm proposal in this regard to the Petroleum Ministry.

According to company sources, ONGC has dropped an immediate plan to sell the cross-holding.