The government has approved 10 % stake sale in Indian Oil Corporation (IOC) to state run ONGC and OIL at a discount of 10 per cent, which will fetch about Rs 5,300 crore to the exchequer.
"Yes, 10 %," Oil Minister Veerappa Moily said when asked if the IOC share sale will happen at a discount to market price.
The sale of 10 % stake or 24.27 crore shares will be through an off-market transaction, with ONGC and Oil India Ltd (OIL) buying 5 % stake each.
"The two companies (ONGC and OIL) will now work out the deal and the stake sale will happen very shortly. It should be happening in next few days. The government advises the board and the two boards will meet and decide. It will be an off-market deal," Oil Secretary Vivek Rae told reporters after an EGoM meeting.
The Empowered Group of Ministers (EGoM) on disinvestment, headed by Finance Minister P Chidambaram, met on Friday to finalise the price of the share sale.
"We expect to raise around Rs 5,300 crore from IOC stake sale," Disinvestment Secretary Ravi Mathur said.
IOC shares were trading at Rs 249 in morning trade on the BSE, up Rs 1.05 apiece, valuing the company at Rs 60,456 crore.
IOC shares have gained more than Rs 37 apiece since January 16, when the EGoM on disinvestment cleared the stake sale in the nation's largest oil firm through a block deal.
The EGoM had then cleared the stake sale at current market price, plus/minus 1 %.
ONGC and OIL, however, wrote to the Petroleum Ministry saying they would each buy a 5 % stake in IOC at the six-month average traded price and not at the current rate.
The government then decided to offer the IOC shares at 10 % discount to current market price to the companies through an off-market deal.
ONGC currently holds an 8.77 % stake in IOC.
Although the Cabinet had originally cleared the stake sale in IOC through an offer for sale, the Finance Ministry had to go in for the block deal route after opposition from the Petroleum Ministry.
The Oil Ministry had argued that IOC shares should not be sold through an offer for sale as the current price did not reflect the right valuation of the company.