The finance ministry will make all attempts to push the big-ticket disinvestment in Oil and Natural Gas Corporation (ONGC) by March, with the government is giving finishing touches to an oil subsidy-sharing scheme, the details of which are likely to be unfolded in the upcoming budget.
“Only for reasons beyond the control of the government will the disinvestment in ONGC slip to the next fiscal... attempts are underway to push for the stake sale in this fiscal itself,” a senior government official said on the condition of anonymity.
The Centre plans to divest 5% of its stake in ONGC, a move that will garner Rs 15,000 to 18,000 crore, depending on the price of the stock at the time it hits the market.
“Although there are concerns about falling oil prices as well as the fall in ONGC’s scrip, the subsidy-sharing scheme will come as a big relief for the company,” the official said. “An announcement on the scheme is expected to lift the company’s stock, which tumbled from a high of Rs 472 in June this year to Rs 350. The scrip’s price will be a big deciding factor in ONGC’s disinvestment.”
The Centre has announced its intent to draw a medium and long-term subsidy roadmap including food, oil and fertiliser. An RBI panel under former governor Bimal Jalan is expected to submit its final report in 3-4 weeks and the new subsidy roadmap will find a strong reflection in the budget, government sources said.
Falling crude oil prices have helped the government reduce its massive fuel subsidy burden (about Rs 1.39 lakh crore) including that on diesel alone at about Rs 90,000 crore in 2013-14.
“The drop in oil prices has come as a big positive for the country’s economy as also for companies such as ONGC that were sharing the subsidy burden on diesel,” a ministry official said..
While jet fuel or aviation turbine fuel is already de-controlled, the subsidy on LPG (cooking gas) has narrowed down due to the fall in oil prices. Indications are that going forward the government may completely abandon this subsidy and target it only for customers below the poverty line.
Upstream producers including ONGC met nearly half of the revenue loss or under-recoveries that fuel retailers including IOC, HPCL and BPCL incurred on selling cooking fuel and diesel until recently at government rates.