ONGC board approved the red herring prospectus (RHP) on Monday, which will be filed as per the instructions of the government, ONGC chairman and managing director AK Hazarika said.
The red herring prospectus (RHP) is likely to be filed with market regulator Sebi on September 5.
The follow-on public offer (FPO), through which the government is selling 5% of its stake in ONGC, may open on September 20 or 27. Keeping the strong fundamentals of ONGC in view, we are confident that the response from the investors will be overwhelming, Hazarika said.
On August 29, government-owned ONGCs board approved the
red herring prospectus after incorporating the companys financial results for the April-June quarter.
The FPO was originally planned in the 2010-11 fiscal, but was later deferred to April 5 as the company did not have an adequate number of independent directors on its board to meet market regulator Sebis listing norms.
It was then rescheduled for July 5, but was again deferred due to adverse market conditions. Following the FPO, the governments stake in ONGC will come down to 69.14% from the current 74.14%.
The company also plans to start oil production from its GS-15 block in the Krishna Godavari basin, off Andhra Pradesh coast, by mid-September, Hazarika said at an annual meeting on Tuesday.
ONGC also expects a one-time gain of R1,500 crore this fiscal year because of a reduction in royalty paid on Cairn
Indias Rajasthan blocks, its finance director, DK Sarraf said.
In the last two years we paid a royalty of R2,000 crore and recently the government has decided that the royalty should be cost recoverable, Sarraf told reporters.
In June, the government granted conditional approval to Vedanta for buying a stake in Cairn India from Cairn Energy, and requiring Cairn India to share royalty payments with ONGC. ONGC and Cairn India co-own several blocks in Rajasthan.
Meanwhile, the state-run explorer is looking for producing assets in less politically risky regions, the head of its overseas arm said on Tuesday.
We need to spread our risk. We need to diversify into politically less risky countries like north America... US, Canada. We would like to readjust our portfolio, ONGC Videsh managing director Joeman Thomas said.
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 the crude oil it sells to them is decided on a quarter-to-quarter basis.
Hazarika said he expects the upstream burden to be one-third of the revenues loss on fuel sales.
During the April-June quarter, upstream firms shouldered one-third of state-run oil marketing companies over R43,000 crore revenue loss on fuel sales. Upstream firms contributed R30,297 crore out of the total revenue loss of R78,189 crore in the 2010-11 fiscal. Of
this, ONGCs share was R24,892 crore.s