Pratim Ranjan Bose

Kolkata, Dec. 27

AS an immediate fallout of the Centre disallowing ONGC to acquire assets in Nigeria, the exploration and production major has dropped plans to sell part of its equity stake in IOC and GAIL (India) during this year.

The corporation holds 10 per cent stake in IOC and 2.35 per cent in GAIL.

The company had earlier considered offloading part of its crossholdings worth about Rs 7,000 crore in the two oil PSUs to finance the acquisition of 45 per cent stake in South Atlantic Petroleum's Akpo oil and gasfield in Nigeria. The proposal, however, was rejected by the Cabinet Committee of Economic Affairs (CCEA) earlier this month.

Company sources said that though the ONGC board had on December 23 allowed the company to offload its crossholding in IOC and GAIL in tranches, no such sale was expected this year. The Cabinet has already allowed the oil PSU to sell its crossholding in tranches.

"We were considering an immediate sale of our investment in the two companies to finance the acquisition in Nigeria. Since the proposal is scrapped, there is no immediate need of funds," an ONGC official said.

Sources, however, pointed out that the company was pursuing an aggressive investment plan for greenfield and brownfield expansion of operations both at home and overseas, which may necessitate offloading crossholding at a later date.

Meanwhile, the IOC board is expected to discuss the sale of its crossholdings in ONGC and GAIL on December 28. IOC plans an immediate sale of 2-2.5 per cent stake in ONGC worth Rs 3,000-3,700 crore through block trading, to finance its investment plans. A detailed plan would be drawn subject to board approval.

The company holds 9.6 per cent stake in ONGC worth roughly Rs 15,000 crore a five-fold growth since 1998.

(This article was published in the Business Line print edition dated December 28, 2005)
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