ONGC, OIL buy 10% government stake in IOC

NEW DELHI: State-run upstream oil companies Oil and Natural Gas Corp ( ONGC) and Oil India (OIL) on Friday together bought 10% government stake in Indian Oil Corp ( IOC).

The government will getRs 5,340 crore, over a fourth of the revised disinvestment target of Rs 19,000 crore for the current fiscal. The budget for 2013-14 had pegged disinvestment proceeds atRs 54,000 crore. Overall, the government has managed to raise Rs 10,434 crore in the fiscal so far.

ONGC and OIL bought 5% stake each in an off-market transaction at Rs 220 per share, a steep discount to Rs 269.2 close on BSE on Friday.

ONGC chairman and managing director Dinesk K Sarraf confirmed his company’s buying 12.135 crore government shares in IOC at Rs 220 per share. OIL head S K Srivastava said his firm paid Rs 2,670 crore for the 5% shares in IOC. The government is expected to raise anotherRs 3,000 crore from stake sale in Axis Bank later this month.

An empowered group of ministers headed by finance minister P Chidambaram had last month agreed to sell stake in IOC to oil majors after petroleum and oil ministry opposed a stock market offer at depressed prices.

The EGoM had decided on a 10% discount to Rs 245 a share price of IOC the day it approved the sale. ONGC's holding in IOC will now rise to 13.77% from 8.77%. OIL did not previously hold any shares in IOC. Government shareholding in IOC will fall to 68.92% from 78.92%.