The petroleum ministry has said that the government plans to sell 5 per cent of its stake in Oil and Natural Gas Corporation (ONGC) and 10 per cent in Indian Oil Corporation (IOC) to raise about Rs 21,000 crore this fiscal.
"We have received a note from department of disinvestment (DoD) that says they have approval of the finance ministry for divestment of government stake in ONGC and IOC," said Petroleum Secretary S. Sundareshan on Friday.
The proposal, he said, is for sale of 5 per cent or 10.6 crore equity shares in ONGC through a follow-on public offer (FPO), which at Friday's trading price of R1,233.3 would fetch the government R13,189 crore.
In IOC, DoD has proposed to sell 5 per cent of government equity through a FPO.
"Simultaneously, IOC also proposes to sell 10 per cent of the expanded equity capital (through an FPO) to raise funds for its expansion plans," he said.
Post stake sale, the government's shareholding in ONGC will come down to 69.1 per cent from 74.1 per cent.
In Indian Oil Corporation, the twin divestment and stake sale would reduce the government holding from 78.9 per cent to 64.6 per cent.
"We are not preparing any Cabinet note. It is the Department of Disinvestment which will do that. We only have to seek approval from the minister (Murli Deora)," Sundareshan said.
According to the road map being prepared, IOC would be the first to be disinvested. It will first sell 10 per cent or 24.3 crore equity shares that at Friday's stock price of R363.9 would fetch the company R8,835 crore to help it part-finance its capital expenditure programme of R75,000 crore.
This would be followed by the sale of 10 per cent government holding amounting to 19 crore shares to raise R7,000 crore.
ONGC divestment will follow this. IOC has written to the oil ministry expressing its interest in raising money from the market for its capital investment requirement.
The nation's largest oil firm wants to take advantage of the recent government decision to free fuel prices by tapping the capital markets.