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| Edited By: |Source: Reuters |Updated: Mar 18, 2018, 03:58 AM IST
The government is set to unveil on Monday a schedule for a stock offering worth about $2.6 billion for state-run explorer Oil and Natural Gas Corp (ONGC), sources with direct knowledge of the deal said on Friday.
The timetable would set the deal in motion, two sources said, after it was postponed several times this year because of turmoil in global markets and lingering concern over government fuel subsidies.
A separate source said ONGC is ready to file a prospectus with regulators at short notice and could also start meetings with investors next week.
The sources did not want to be identified as they were not authorised to speak to the media on the plans.
The government owns 74.14% in ONGC and plans to sell a 5% stake in the offering.
The sale is part of broader proposal to raise about $9 billion through share sales in public sector firms to help plug the government’s fiscal gap and generate funds for schemes for the poor.
A successful share sale of ONGC is very crucial for the government as ONGC will not only flag off and set the trend for this year’s divestment scheme, but is also expected to contribute maximum funds to government coffers through the follow-on route at around Rs12,000 crore, followed by IndianOil with a Rs10,000 crore target. Other cash-heavy companies in the list include Steel Authority of India, Bharat Heavy Electricals, Hindustan Copper and Power Finance Corporation.
Experts say ONGC’s production has returned to good levels after seeing a decline for a few years in a row and with the subsidy regime getting more and more transparent, the company has become attractive again.
“ONGC has successfully stemmed the drop in its own maturing fields with the decline ratio at about 1% compared to about 7% it otherwise would have been. We expect production to rise further going forward on account of the increased JV share, further implementation of IOR/EOR projects as well as from development of marginal fields,” analyst Nilesh Banerjee of Goldman Sachs, in a July 8 report.
(With DNA bureau inputs)
