Buoyed by the success of the SAIL divestment, the Centre is looking to wrap up a similar stake sale in ONGC by next month. The Cabinet Committee on Economic Affairs (CCEA) had approved the disinvestment in September.

The Centre intends divesting 5 per cent, or over 42.77 crore shares, in ONGC.

Based on the last closing price (December 19) of ₹349.30, the Centre can mop up about ₹14,900 crore from the sale. Currently, it holds 68.94 per cent in ONGC.

SAIL success Earlier this month, the Centre had sold 5 per cent of its equity in Steel Authority of India Ltd (SAIL).

The offer was oversubscribed more than two times.

ONGC’s share sale is critical for the Centre’s fiscal health as tax collections have been tepid.

The Centre will use the offer-for-sale route through stock exchanges (known as the auction method) for the share dilution. It will set aside a higher quota for retail investors.

More for retail Although SEBI norms prescribe only a minimum 10 per cent for retail investors, for ONGC the Government proposes to reserve 20 per cent for them and also give a 5 per cent price discount. This concession is to be extended for the Coal India and the NHPC divestments, too.

On the timing, a government official told BusinessLine that “work is in progress on a subsidy-sharing formula and we expect it will be finalised in the next two weeks.

“The sell-off process will take place soon after that.”

As part of the Centre’s subsidy-sharing mechanism to compensate public sector oil marketing companies for selling domestic LPG, kerosene and, till recently, diesel below market price, ONGC bears a sizeable part of the burden. ONGC shoulders almost half of the under-recoveries of oil marketing companies, hurting its profitability.

ONGC’s contribution was ₹49,421 crore in 2012-13 which rose to ₹56,384 crore in 2013-14. In the first half (April-September) of 2014-15, it was ₹26,841 crore. Now, the Centre is looking at various options that could reduce the burden for ONGC.

During road shows for the ONGC disinvestment, potential investors had raised concerns about the impact of the ad hoc subsidy-sharing mechanism on the oil major’s balance sheet.

MOIL sell-off Parallely, the Department of Disinvestment has initiated the process for a sell off in MOIL Ltd. It has issued a Request for Proposal for appointing merchant bankers and selling brokers for disinvestment of 10 per cent equity in the company. The Centre intends disinvesting 10 per cent of its 71.57 per cent holding in the company. At the last closing price of its shares, it can get up to ₹5,000 crore.