The Hindu Business Line : ONGC in no hurry to offload its stake in GAIL

Oil and Natural Gas Corporation (ONGC) seems to be in no hurry to offload its stake in GAIL (India) for now. The company, which was contemplating selling its stake in GAIL but to hold on its stake in Indian Oil Corporation in 2005-06, proposes to take a fresh view on the issue during the current fiscal (2006-07).

A senior ONGC official said, "We are in no hurry to offload our stake in GAIL. The decision would depend on market conditions." The market was abuzz on March 30 that the company had sold part of the 4.83 per cent stake it holds in GAIL. However, the company denied the reports.

This came close on the heels of the ONGC Chairman and Managing Director, Mr Subir Raha, stating that the company though had no plans to sell its stake in Indian Oil but was certainly looking at GAIL. ONGC was proposing to hive off its stake in GAIL, as it saw no synergy of operations in shareholding. But there is some justification in ONGC holding shares in Indian Oil, as it has a Director on its board because of its stake in that company. However, GAIL had refused to give ONGC directorial position on its board. Indian Oil, ONGC and GAIL had acquired shares in each other in 1999 on the basis of a Government directive. ONGC had acquired stakes in GAIL at about Rs 60 per share.

The Cabinet Committee on Economic Affairs last year had given its approval to the boards of these three companies to offload their cross-holdings. Announcing this, the Finance Minister, Mr P. Chidambaram, had said the manner and timing of offloading would be left to the individual oil PSU, which would take the decision keeping in view their fund requirements as well as market conditions. It would, however, be conducted under the overall supervision of the Ministry of Petroleum and Natural Gas and in consultation with the Finance Ministry. There would also be no ceiling on the quantum of offloading, he had said, adding that it would depend totally on the PSU's fund requirement.

The decisions would be taken on a case-to-case basis. The proceeds would be used for their capital expenditure programmes approved under the 10th Plan. It would be mainly used for expansion of their exploration and production activities. If needed, it could also be used for improving other downstream activities.