Govt looks to raise Rs 9.5k cr through IOC stake sale

Govt looks to raise Rs 9.5k cr through IOC stake sale

Govt looks to raise Rs 9.5k cr through IOC stake sale

The government is looking to raise Rs 9,000-9,500 crore through sale of 10 per cent stake in Indian Oil Corporation (IOC) through an offer for sale on Monday.

If this happens, the government will reach the halfway mark of its divestment target of Rs 41,000 crore through minority stake sale in PSU firms. This is the first time since 2007 that disinvestment will fetch over Rs 11,000 crore in the first half of a fiscal.

The government has already raised Rs 3,300 crore through stake sales in fiscal 2015-16. In the past five years, the highest proceed was Rs 2,400 crore in 2010-11 in the first half of the financial year.

Going ahead, Disinvestment Secretary Aradhana Johri says the plan for stake sale is robust. If the government succeeds in meeting the divestment target this year, it will be another feather in its cap.

The Centre has seldom met its disinvestment target since the process started after 1991, exceeding the target only in 1994, 1998, 2003 and 2004.

In 2014-15, the government raised around Rs 25,000 crore against a target of Rs 58,425 crore. In 2013-14, the target was Rs 40,000 crore, but not even half of the money was realised. In 2012-13, it was Rs 30,000 crore, but around Rs 24,000 crore could be garnered.

Although the government has missed its divestment target for five years in a row now, the target for the current fiscal is set at Rs 69,500 crore.

Rs 41,000 crore of this is expected to come from minority stake sale in PSUs, while Rs 28,500 crore is expected to come from other strategic stake sales. So far, the government has sold minority stake in three PSUs — PFC, REC and Dredging Corp. The PSUs lined up for divestment in the current fiscal include ONGC, BHEL, Nalco, NMDC, MMTC and Engineers India.

The time chosen for the IOC stake sale, however, seems to be most opportune, with crude oil prices trading lower. Johri said: “These (disinvestment) calls are taken based on where the market stands, stock prices and market appetite.”

She said retail reservation in the IOC offer for sale is at 20 per cent. “There is an excellent appetite for IOC stocks right now,” she said.