India is considering selling 10 percent in Indian Oil Corp and 5 percent in Oil and Natural Gas Corp in the March quarter, a deal that could fetch the government about $5.6 billion at current prices.
“The oil ministry has taken an in-principle decision, we have to go to the cabinet now,” Oil Secretary S. Sundareshan told reporters on Monday.
The sales will be part of a government plan to sell stakes in about 60 state-run firms over the next few years, as India moves to cut a stubbornly high fiscal deficit and garner funds to spend on schemes for the poor.
The government expects to raise about $8.6 billion in the current fiscal year that ends next March through such sales.
Sundareshan said the oil ministry had also allowed refiner Indian Oil Corp to sell an additional 10 percent of the expanded share capital.
Asked if the share sale of the two firms would happen by the end of this fiscal, he said, “hopefully”. The government owns 78.92 percent of Indian Oil Corp and 74.14 percent in ONGC.
Sundareshan also said the Asian Development Bank had written a letter seeking to exit from gas firm Petronet LNG.
Petronet was founded by state-run firms IOC, ONGC, Bharat Petroleum Corp and GAIL (India) that together own 50 percent stake.
“They (ADB) have made an offer in the past. They have said again. Their policy is to exit after a company is functioning,” Sundareshan, who is also chairman of Petronet, said.
He said the state-run companies may not exercise their right of first refusal for the ADB holding.
“It is a private company. If they (state-run firms) raise the stake it will cease to be a private company,” he said.
France’s GDF Suez holds 10 percent and the Asian Development Bank (ADB) holds 5.2 stake in Petronet while the balance 34.8 percent is held by the public.