Rae said the Empowered Group of Ministers will take up the matter later this week. He added that there won't be a lock-in period and ONGC/Oil can sell the IOC stake once stock prices go up. As the EGoM met last week, no final decision reached on this.
The oil ministry, he said, has concerns over IOC shares being sold at current trading rates and hence the decision to sell the stakes to other oil PSUs. In late 1990s, the government sold its shares in ONGC, GAIL and Indian Oil to raise R4,643 crore. As per the cross-holding plan, ONGC bought 9.11% in IOC and 4.83% in GAIL. IOC bought 9.61% in ONGC and 4.83% in GAIL. GAIL in turn bought 2.4% in ONGC.
In 2006, IOC sold 1.92%, or a fifth of its holdings in ONGC for R3,672 crore, recovering its entire initial investment and some more. It also sold half its holdings (2.41%) in GAIL for R561 crore.
The government's disinvestment target for this fiscal is R54,000 crore, including R14,000 crore planned to be raised from sale of its residual stakes in Hindustan Zinc and Balco. With the roadblocks in key PSU stake sales (like Coal India and BHEL), the Centre will now rely also on special dividends from some cash rich PSUs (Coal India has been asked to give R9,000 crore dividend) and the exchange traded fund to be launched soon with which it intends to raise R3,000 crore by March-end. At Friday's closing price, IOC has market capitalisation of R48,644 crore. This m-cap is after factoring in IOC's 7.69% holding in ONGC worth about R18,000 crore.
That leaves about R30,000 crore market value that is attributable to IOC.