Finance Ministry hopeful of ONGC stake sale by December end

NEW DELHI: The government is hopeful that 5 per cent disinvestment in blue-chip oil company ONGC will be completed by December, although it has advised SAIL to put on hold its share sale for the time being.

"All preparations have been completed and the (ONGC) issue is likely to be completed by the third quarter of 2011," according to a status report prepared by the Department of Disinvestment in the Finance Ministry.

The government plans to sell 5 per cent, or 427.77 million shares, through the follow-on public offer (FPO). After the FPO, its stake in ONGC will come down to 69.14 per cent from 74.14 per cent.

Although the government had planned to raise Rs 40,000 crore from disinvestment in the current fiscal, it has not been able to make much headway because of uncertain market conditions. So far, it has raised only Rs 1,144 crore from stake sale in Power Finance Corporation (PFC).

Volatile stock market conditions is forcing the government to delay stake sale in PSUs. Global equity markets have been on a downside on fears of a slow recovery in the Eurozone economies as well as the debt crisis in the US.

Referring to the planned share sale offer of steel Maharatna SAIL, the status report said the issue would hit the streets only when market conditions improves.

Through the share sale, the government plans to divest its 5 per cent stake in SAIL, while the company would issue fresh equity of the same proportion under the FPO.

"Timelines for opening the issue would be decided in due course based on improvement in market conditions and advice of BRLMs. At current price it may not be advisable to go for the FPO now," the status report said.