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Petroleum Ministry opposes IOC Stake sale at current market price

<p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">A day ahead of a ministerial panel meeting to decide on disinvestment in Indian Oil Corp (IOC), Petroleum Ministry today opposed stake sale in the nation&#39;s largest oil firm at current subdued prices.</span></span></span><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial"> At today&#39;s closing price of INR 195.50, IOC has a market capitalisation of INR 47,466 crore. This m-cap is after factoring in IOC&#39;s 7.69 per cent holding in Oil and Natural Gas Corp ( ONGC) worth INR 17,9711.78 crore at today&#39;s closing price.</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">This leaves less than INR 30,000 crore market value that is attributable to IOC. This is less than the investment that IOC is putting in setting up a 15 million tons refinery at Paradip in Odisha, the oil ministry feels. Sources said the ministry put these views at an inter-ministerial group (IMG) of secretaries while opposing sale of 10 per cent stake in IOC.</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">The IMG inputs will be put at tomorrow&#39;s meeting of the Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram, they said, adding the EGoM is to decide on the schedule of IOC disinvestment. Moily has time and again said the IOC cannot be sold when the scrip is way lower than the 52-week peak of INR 375 reached on January 18 last year.</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Investors at promotional roadshows in the US, the UK and Singapore questioned the timing of the stake sale as there is no clear roadmap yet to address the lingering fuel subsidy issue</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Finance Ministry is keen on IOC stake sale to meet the fiscal&#39;s disinvestment target of INR 40,000 crore. The sale of 19.16 crore IOC shares at the current price would fetch the government less than INR 3,750 crore. The government holds 78.92 per cent stake in the country&#39;s largest oil refiner as on June 30.</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Citibank, HSBC and UBS Securities are among the five merchant bankers selected to manage the IOC share sale. IOC has 10 refineries with 65.7 million tonnes of crude oil processing capacity, which constitutes 31 per cent of the domestic refining capacity. It has 11,000-plus km of crude oil, product and Natural Gas pipelines and a 44 per cent fuel market share. Also, it is the second largest petrochemical firm in the country behind Reliance Industries. It is expanding its footprint in oil and gas exploration, LNG, wind and solar power besides venturing into nuclear energy to become an integrated energy company.</span></span></span></p> <p><span style="color:#696969"><span style="font-size:11px"><span style="font-family:arial">Source-On Request</span></span></span></p>