Oil PSUs get govt nod to sell cross-holdings

New Delhi, Aug 1 | Updated: Aug 2 2005, 05:30am hrs
The petroleum ministry has given an in-principle approval to the move of the three state-run oil and gas companies - Indian Oil Corporation, Oil and Natural Gas Corporation (ONGC) and GAIL (India) - to offload their cross-holdings in each other.

IOC will be the first to offload its 9.61% stake in ONGC worth about Rs 13,000 crore .

The decision was taken at a meeting chaired by petroleum minister Mani Shankar Aiyar on Monday with the three companies. The ministry has asked IOC to work out a plan for offloading its stake in ONGC.

ONGC holds 9.11% in IOC while both ONGC and IOC own 4.83% each in GAIL. GAIL, in turn, owns a 2.4% stake in ONGC.

Ministry officials said at present, only IOC is keen on offloading its stake in ONGC. However, since the amount is huge, the offloading will take place in two phases, spread over a period of one year.

The decision to allow IOC to offload its equity acquires urgency in the wake of the fact that the corporation, along with its marketing subsidiary IBP, has reported first ever net loss in its history and warned that the freeze on fuel prices may also impact its expansion plans.

IOC reported a net loss of Rs 54.23 crore for the first quarter of the current fiscal as opposed to a net profit of Rs 1,472.17 crore in the same period last year.

Only ONGC is at present in a position to buy back the stakes held by IOC in the company.

The government is exploring various options of allowing oil PSUs to offload their respective stakes.

Selling it directly in the market is one option. However, it is for the companies to decide, officials said.