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ONGC share sale may open on Sept 20 or 27

business Updated: Aug 30, 2011 22:13 IST
Agencies
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State-owned Oil and Natural Gas Corp's (ONGC) much-delayed Rs 12,000 crore follow-on public offer (FPO) may open on September 20 or 27.

"ONGC board approved the red herring prospectus (RHP) on Monday, which will be filed as per the instructions of the government," said AK Hazarika, ONGC chairman and MD.

The RHP is likely to be filed with market regulator SEBI on September 5.

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"Keeping the strong fundamentals of ONGC in view, we are confident that the response from the investors will be overwhelming," he said.

On August 29, ONGC's board approved the RHP after incorporating the company's financial results for the April-June quarter. The government plans to sell 5%, or 427.8 million shares, through the FPO.

The FPO was originally planned in the 2010-11 fiscal, but was later deferred to

April 5 as the company did not have an adequate number of independent directors on its board to meet SEBI's listing norms. It was then rescheduled for July 5, but was again deferred due to adverse market conditions.

The government had in January appointed Citigroup, Nomura Holdings, Bank of America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley to manage ONGC's share sale. Following the FPO, the government's stake in ONGC will come down to 69.1%.

Meanwhile, ONGC expects a one-time gain of Rs 1,500 crore ($326 million) this fiscal year because of a reduction in royalty paid on Cairn India's Rajasthan blocks, its finance director said. "In the last two years we paid a royalty of Rs 2,000 crore and recently the government has decided that royalty should be cost recoverable," DK Sarraf told reporters on Tuesday.

In June, government granted conditional approval to Vedanta for buying a stake in Cairn India from Cairn Energy, and requiring Cairn India to share royalty payments with ONGC. ONGC and Cairn India co-own several blocks in Rajasthan.

(With PTI/Reuters inputs)