Indian Oil’s share sale deferred at least for a week

Amidst serious opposition from the Petroleum Ministry, an Empowered Group of Ministers failed to take a decision on pricing for divesting Government’s stake in Indian Oil Corporation. Now, the panel is expected to meet again next week.

“It has been deferred,” Petroleum Minister Veerappa Moily told reporters after the meeting chaired by Finance Minister P. Chidambaram. However, he refused to provide reasons for that. The Government aims to sell 10 per cent or 24.27 crore shares in the oil marketing company. At the closing price of Rs 198.95, the sale can give Rs 4,830 crore to the Government, which currently holds 78.92 per cent shares of the company.

Perception differs Although the Finance Ministry is keen to push the sale to boost its revenue collection, the Oil Ministry feels that time is not good for it as the stock price is at a five-year low. There is also a feeling that until a decision is taken on the import parity mechanism, there should not be any disinvestment.

A senior Government official said there are differences and the effort will be to trash these out before the next meeting. Any decision to defer the process can be taken only by the Cabinet Committee on Economic Affairs. The Ministerial panel can decide the timing and pricing of issue.

On various earlier occasions, the Petroleum Minister had spoken against the sale, saying the disinvestment cannot take place when the share is way off its 52-week peak of Rs 375 touched on January 18 last year. Even investors at promotional road shows in the US, the UK and Singapore questioned the timing of the stake sale as there is no clear roadmap yet to address the lingering fuel subsidy issue.

IOCL is the third company after BHEL and Coal India where the Government is facing difficulty in selling its shares. In fact, the Government is looking for higher dividends in lieu of disinvestment in Coal India while there is no clarity on BHEL. The Government has targeted to mop up Rs 40,000 crore through the sale of shares in Central Public Sector Enterprises, but so far it has managed to garner only less than Rs 3,000 crore.

High hopes on CPSE Now, the Government is pinning high hopes on the CPSE Exchange Traded Fund to mop up more revenue. The Ministerial panel will meet on Friday to finalise the constituents of the fund. The plan is to include shares of 11 blue-chip companies, such as ONGC, Coal India, Gail, IndianOil, Oil India and PowerGrid, beside others.

>shishir.s@thehindu.co.in