NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Govt clears IOC, Bhel stake sale; to get over Rs 7,300 cr

Govt clears IOC, Bhel stake sale; to get over Rs 7,300 cr

February 28, 2014 21:22 IST

The government on Friday cleared disinvestment in two bluechip state-owned companies IOC and Bhel, which would fetch over Rs 7,300 crore (Rs 73 billion) to the exchequer in the current fiscal.

The decision to go ahead with stake sale of 10 per cent in IOC and 5 per cent in Bhel was taken by the Empowered Group of Ministers on disinvestment, headed by Finance Minister P Chidambaram.

No timeline for the stake sales, however, have been decided as yet, sources said. The government will be selling 10 per cent stake in Indian Oil Corporation (IOC) to state run ONGC and OIL at a discount of 10 per cent, which would fetch about Rs 5,300 crore (Rs 53 billion) to the exchequer.

The sale of 10 per cent stake or 24.27 crore shares will be through an off-market transaction, with ONGC and Oil India Ltd (OIL) buying 5 per cent stake each.

"The two companies (ONGC and OIL) will now work out the deal and the stake sale will happen very shortly. It should be happening in next few days. The government advises the board and the two boards will meet and decide. It will be an off-market deal," Oil Secretary Vivek Rae said.

IOC shares closed at Rs 248.10, up 0.06 per cent on BSE. "We expect to raise around Rs 5,300 crore from IOC stake sale," Disinvestment Secretary Ravi Mathur said.

As regards Bhel disinvestment, the government will sell 5 per cent of its stake through a block deal to state-owned LIC, which would fetch about Rs 2,045 crore to the exchequer.

"Bhel disinvestment will happen this fiscal through block deal to LIC," Mathur added. At the current market price of Rs 167.20 apiece, the sale of 5 per cent stake, or 12.23 crore shares, in Bhel would fetch about Rs 2,045 crore to the exchequer.

The Department of Heavy Industries, which is the administrative ministry of the company, has for long opposed the proposed disinvestment in state-run Bhel, citing unfavourable market conditions.

In August 2011, the Cabinet had cleared selling government's 5 per cent stake in Bhel through follow-on public offer (FPO). The government holds a 67.72 per cent stake in the Navratna company.

However, market conditions led to a delay in the issue and the company in April 2012 withdrew the draft prospectus filed with market regulator Sebi.

The government has so far raised about Rs 5,093.87 crore (Rs 50.93 billion) through stake sales in PSUs. As per the revised estimates in the Budget, the disinvestment target was lowered to Rs 16,027 crore (Rs 160.27 billion) in this financial year from Rs 40,000 crore (Rs 400 billion). 

© Copyright 2017 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.