ONGC public issue may open in Sept

Our Bureau Updated - November 12, 2017 at 05:03 PM.

After FPO, Govt's share will come down to 69.14%

3131bl_ongcCOL.eps

ONGC's follow-on offer (FPO) may open on September 20 or 27. The red herring prospectus (RHP) for the FPO could be filed on September 5. The Government is offloading five per cent of its stake in ONGC and plans to raise about Rs 12,000 crore through the issue.

With the FPO, the Government's stake in the company will come down to 69.14 per cent from the current 74.14 per cent.

The road show for the issue is likely to start from September 6 from New York.

“Our board approved the RHP on August 29, which will be filed as per the instructions of the Government. We are ready to file in 24 hours time,” the ONGC Chairman and Managing Director, Mr A.K. Haziraka, said.

“Keeping the strong fundamentals of ONGC in view, we are confident that the response from the investors will be overwhelming,” Mr Hazarika said.

Gnawing issue

While some of the main concerns such as royalty issue of the Rajasthan oil fields and appointment of independent directors have been resolved by the Government before the FPO, one issue which still remains unclear is the subsidy sharing mechanism.

To make petroleum products available at affordable prices, the Government subsidises fuel prices. The upstream companies have to share this subsidy burden by extending discounts to public sector oil marketing companies on sale of crude oil and products.

The average crude oil price for India basket during 2010-11 was $ 85.09 a barrel, 22 per cent higher than in 2009-10. For 2010-11 upstream companies had to share 38.8 per cent of the subsidy burden instead of the past practice of 33.3 per cent. ONGC had to share 82 per cent of the upstream burden.

The FPO was originally planned in the 2010-11 fiscal, but was deferred as the company did not have an adequate number of independent directors on its board to meet SEBI's listing norms. Subsequently, it got further delayed due to adverse market conditions.

In January, Citigroup, Nomura Holdings, Bank of America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley were appointed to manage ONGC's share sale.

Published on August 30, 2011 16:09