ONGC, Oil India buy 5% stake each in IOC

ONGC, Oil India buy 5% stake each in IOC

State-owned ONGC and Oil India Ltd (OIL) bailed out the government on Friday after they together bought 10 per cent government stake in Indian Oil Corp (IOC) for Rs 5,340 crore.

With this, the exchequer earns Rs 10,434 crore through divestment proceeds against the overall target of Rs 16,000 crore for the current financial year.

Both Oil and Natural Gas Corp and OIL bought 5 per cent stake each in IOC in an off-market transaction at Rs 220 per share.

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 per cent shares in IOC.

An Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram had on February 28 decided to sell the stake in IOC, the nation's largest oil firm, at a discount of 10 per cent through an off-market deal.

With the stake purchase, ONGC's holding in IOC has increased to 13.77 per cent from 8.77 per cent stake.

OIL did not previously hold any shares in IOC.

After the disinvestment, government shareholding in IOC has come down to 68.92 per cent, from 78.92 per cent.

The Cabinet had originally approved sale of stake in IOC through an offer for sale. But the Petroleum Ministry opposed the move saying that IOC shares should not be sold through an offer for sale as the price did not reflect the right valuation of the company.

The EGoM then, on January 16, decided to sell the stake through block deal. The government is hopeful of achieving its revised target of Rs 16,000 crore from disinvestment during the curent fiscal, a top government official said.