The department of investment and public asset management (DIPAM) has asked ONGC to list its overseas arm ONGC Videsh (OVL) on the Indian stock exchanges, but a top OVL executive on Wednesday said this is not the right time to do so.
“We have many many projects such as those in Mozambique and Venezuela which are still to be monetised. At this moment, the company’s right valuation will not be reflected,” the executive said.
DIPAM, under the ministry of finance, had recently communicated through a letter to ONGC that it should list OVL.
The executive also said its negotiations with Iran regarding the Farzad-B gas field has been put on ‘sleep mode’, given the challenges faced in the Persian Gulf country due to sanctions imposed by the US.
ONGC, through its overseas arm OVL, has stake in 41 oil and gas projects under various stages of development across 20 countries including Brazil, Colombia, Iran, Iraq, Mozambique, New Zealand, Russia, Venezuela and Vietnam. Since its inception, OVL has spent around Rs 1.06 lakh crore in acquiring assets till the end of 2016-17, as per its latest annual report.
The executive quoted above added that the company’s South Sudan field has been put to production last week and is producing around 8,000 barrels per day of oil. While all the oil produced here will be imported, North Sudan will be receiving $28 per barrel as a lump sum and transit fee for using its land for the export facility.
While OVL has been a high-turnover but comparatively less-profit company, it was in the red in FY16.
However, the company recovered and reported a net profit of Rs 701 crore on a turnover of `1,761 crore in FY17, mostly because of returns from its investment in Russia’s Vankor fields.
The direction to list OVL is in sync with the Securities and Exchange Board of India (Sebi) which stipulates that public enterprises having a positive net worth and without any accumulated loss should be listed on stock exchanges so that the government can fetch its true value.
The issue of listing OVL on Indian bourses had cropped up earlier too without any success.
The proceeds from the listing of OVL — if it materialises within this financial year — are likely to generate dividend for the government which is struggling to meet its disinvestment target of `80,000 crore.
So far this year, the government has raised only Rs 9,220 crore or less than 10% of the annual target.
The poor disinvestment performance is partly because the government’s plan to sell Air India did not go through this year.