The board of ONGC has, for the second time in just over a month, approved selling its entire 49 per cent stake in helicopter service provider Pawan Hans alongside government’s privatisation bid, officials with direct knowledge of the development said. ONGC board had first on June 29 approved exiting Pawan Hans and its interest being clubbed with the 51 per cent government stake that is already on offer for sale.
Officials said ONGC on July 2 wrote to the government communicating the decision of the board but the Department of Disinvestment and Public Asset Management (DIPAM), which is managing the sale of government stake, sought certain clarifications from the company.
Among others, ONGC was asked to state if the terms on which government stake sale is being sold would be acceptable to it. The company board at its meeting on August 2 endorsed such terms, they said. This now paves way for the government to make a revised offer to sell 100 per cent stake in Pawan Hans.
DIPAM, which floated the offer for sale for government’s 51 per cent stake in Pawan Hans twice in the last 10 months, is likely to issue an amended expression of interest (EoI) shortly. Officials said ONGC is of the view that its investment in Pawan Hans is no longer strategic as it charter hires helicopters to ferry staff to its oil and gas locations, mostly offshore, through competitive bidding.
Of the 22 helicopters it currently has on hire, just seven or less than a third are from Pawan Hans. Pawan Hans owns a fleet of 46 helicopters. ONGC board wants to consolidate business and focus resources on core oil and gas exploration and production business and not scatter bandwidth of management in unrelated businesses, they said.
Officials said when the government had first floated an offer to sell its 51 per cent stake in October last year, ONGC made an offer to DIPAM that its 49 per cent stake be also sold on same terms. At that time, the company was told to get its board approval.
Meanwhile, the government in early April withdrew its offer for sale as only two bidders including Indian helicopter major Global Vectra Helicorp and US-based Continental Helicopters made an offer. A revised offer for sale was floated later that month, which fetched about half a dozen bidders.
DIPAM is of the view that a revised offer for sale would have to be floated as some bidders may have been deterred by 51 per cent stake and would now prefer to bid when 100 per cent is being offered. Pawan Hans operates seven Dauphin N3 Helicopters for ONGC’s offshore operations. These helicopters, based at Juhu airport, Mumbai and Rajahmundry, undertake passenger crew change service and production trips on a regular basis to meet the offshore requirements of the state-owned oil and gas producer.