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• The government had deferred ONGC’s public offer to raise up to $2.5 billion in October, after tepid response from investors during roadshows amid weak equity markets.The government on Wednesday decided to auction 5% of its stake in the country’s largest oil explorer Oil and Natural Gas Corp. Ltd (ONGC) to institutional investors, in a last ditch effort to get close to its Rs. 40,000 crore disinvestment target for the current fiscal.Taking a call: Petroleum and natural gas minister Jaipal Reddy. PIBWhile the empowered group of ministers (eGoM), headed by finance minister Pranab Mukherjee, decided to auction stake in ONGC, disinvestment in Bharat Heavy Electricals Ltd (Bhel) has been pushed to next fiscal.
• The ministers attending the eGoM did not disclose the timing of the stake sale in view of the price sensitivity involved. The panel will meet again soon to decide on the reserve or base price and the timeline.The ONGC stake sale, however, will not help in meeting the ambitious target of Rs. 40,000 crore during the fiscal ending 31 March.Disinvestment secretary Mohammad Haleem Khan said that meeting the budget target “is now almost impossible”.The stake sale in ONGC may fetch around Rs. 12,000 crore and together with the Rs. 1,145 crore proceeds from the Power Finance Corporation disinvestment, the government would be able to raise over Rs. 13,000 crore in the current fiscal.
• Besides, a likely initial public offering (IPO) of National Buildings Construction Corp. Ltd could also bring around Rs. 250 crore to the exchequer.“The eGoM has taken a decision to exercise the option (of auction route allowed by the Securities and Exchange Board of India (Sebi)... in respect to ONGC and Bhel. As for further decision (timing and price), the eGoM will meet shortly again. For all other decisions, we will have to wait for the next meeting,” petroleum and natural gas minister Jaipal Reddy said.While the government, according to sources, will try to push for the stake sale in ONGC in the current fiscal itself, it will wait for market conditions to improve for the 5% stake auction in Bhel.
• The government currently holds a 74.14% stake in ONGC and a 67.72% stake in Bhel. A 5% stake sale in Bhel could fetch Rs. 5,000 crore.Heavy industries and public enterprises minister Praful Patel said, “We have not taken any decision on Bhel. At this moment, we feel it is a little premature. Sentiments about the power sector are low...the approach or outlook is not bright or positive”.Besides Patel and Reddy, the eGoM was also attended by home minister P. Chidambaram, heavy industries secretary S. Sundareshan, oil secretary G.C. Chaturvedi and deputy chairman of Planning Commission Montek Singh Ahluwalia.
• Disinvestment secretary Khan added that a final picture on raising funds from disinvestment in the current fiscal would emerge after the next meeting of the eGoM. “There will be one more meeting of the eGoM...The eGOM will also decide (on pricing mechanism),” Khan said. He said the government will use all available options for stake sale in the public sector units.Earlier this month, market regulator Sebi allowed promoters to sell up to a 10% stake using the auction window of stock exchanges.
• “The auction method of Sebi guidelines is now available to us. All the cases in which the cabinet committee on economic affairs has cleared disinvestment in follow-on public offer mode may use this method. But it will be a one-to-one method,” Khan said.Poor receipts from disinvestment would further aggravate government finances and push the fiscal deficit above the budgeted level of 4.6% of the gross domestic product. Experts say the fiscal deficit can escalate to 5.6% this fiscal, up from 4.7% earlier.

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