Govt to sell 5 per cent stake in ONGC in November, may garner Rs 18,000 crore

The government is likely to divest 5 per cent stake in state-owned Oil and Natural gas Corporation (ONGC) in the first week of November, which may fetch about Rs 18,000 crore to the exchequer, a top Finance Ministry official said on Monday.

"Keeping valuations in mind, this is the right time to divest in ONGC," he said, adding that the share sale was likely to happen in the first week of November.

The official said the disinvestment secretary on Monday held a meeting with merchant bankers in this regard.

In September, the Cabinet had cleared 5 per cent stake sale in ONGC. The disinvestment department has also selected 5 merchant bankers - Citigroup, HSBC Securities, UBS Securities, ICICI Securities and Kotak Mahindra Capital - for managing the stake sale.

Shares of ONGC were trading at Rs 421.90 with a gain of 6.21 per cent in afternoon trade on the Bombay Stock Exchange (BSE). At the current market price, the sale of 5 per cent stake or over 42 crore shares, would fetch about Rs 18,000 crore to the exchequer.

The official further said that the decisions on gas price hike and diesel deregulation would give clarity to investors.

After a long wait, the government on Saturday deregulated diesel prices and raised the price of natural gas. While diesel deregulation is an important reform initiative, hike in gas prices will directly benefit oil exploration companies, including ONGC.

The merchant bankers will advise the government on the timing and modalities of Offer For Sale (OFS) and ensure best returns to the government, which holds 68.94 per cent stake in ONGC.

The government had last sold 5 per cent stake in ONGC in 2012 for Rs 14,000 crore.

In the current fiscal the government plans to mop up Rs 43,425 crore from stake sale in various public sector undertakings.