The sluggish disinvestment programme of the UPA government has hit yet another road block. The long summer in the United States and Europe, ending in August , has ensured that all disinvestment issues have been pushed further and none of the government?s blue chip companies will now hit the markets before the end of September.

State-owned oil and gas major ONGC, steel giant SAIL and engineering firm Bhel were lined up to hit markets with their follow-on public offers over the next few weeks.

These large issues will now have to be accommodated at close intervals in the remaning months of the financial year if government remains committed to achive targeted disinvstment earnings of R40,000 crore during 2011-12.

?All disinvestment offers will have to be pushed beyond the months of July-August as investors across US and Europe are on a summer break,? a senior finance ministry official told FE. A few issues have already got delayed by few months due to choppy market conditions.

The big-ticket public issue of ONGC that is expected to mop up R11,500 crore for the government is now likely to be the first candidate after this unintended break in September. The public offer in which government plans to sell 5% (427.77 million shares) was originally planned for 2010-11 fiscal but was deferred to April 5 as the company did not have adequate number of independent directors on its board to meet the market regulator Sebi?s listing norm. The issue slated for July 5 has now been further pushed as the investor’s need clarity on the subsidy sharing mechanism before the issue can hit the market.

Phani Sekhar, Fund Manager-PMS, Angel Broking said: ?Post the decision of the empowered group on fuel prices and duty rejig, the market response to the ONGC?s FPO would have been positive. In addition, the decision on Cairn-vedanta deal and clarity for the oil major was favorable for a good response. Expectations of getting further clarity on the subsidy-sharing mechanism is too demanding.?

The upstream companies? share of under-recoveries (revenue loss) has been increased from one-third (33.33%) to 38.75% for the year 2010-11. Oil and gas producers like ONGC have to make good a part of the revenues that fuel retailers lose on selling diesel, domestic LPG and kerosene at government-controlled rates.

The discount that ONGC gives to IOC, BPCL and HPCL on crude oil it sells to them, is decided on a quarter-to-quarter basis.

Experts believe that the company is waiting for crude oil prices to further ease before the issue could be pushed. This brings more uncertainty to the issue as crude oil movement in September can not be anticipated now.

Besides, further delay in bringing out the ONGC offer has derailed the plans of other public offers also. Sekhar added that,? post August the window is pretty narrow to push big offers like Steel Authority of India (SAIL), Bharat Heavy Electrical Limited (Bhel). The decision to push all public issues post August will pose a great challenge for the disinvestment department to meet its budget target of Rs 40,000 crore?. Some of the other issues expected to come are NBCC, MMTC, Rashtriya Ispat Nigam (RINL) and Indian Oil (IOC) and Hindustan Copper limited (HCL).

As far as time line is concerned, department will not be able to push another issue along with ONGC market will not have that much appetite.

Post august the next three months are crucial for disinvestment department as some of the big issues like SAIL, Bhel, MMTC are lined up. With markets having a dry spell and facing a liquidity crunch, experts believe this will pose a serious challenge for all issues.