No decision on IOC issue yet, says oil secy
New Delhi   26-Dec-2010

The central government on Saturday said it had not taken any decision on the timing of the proposed public issue of the country's largest oil marketing company, IndianOil (IOC), even as decks had been cleared for the disinvestment of Oil and Natural Gas Corporation (ONGC).

“We have not taken any decision on the follow-on public offering (FPO) of IOC. There is no pressure on whether it has to be done in a particular financial year. We have just approved ONGC’s five per cent disinvestment plan,” said S Sunderashan, petroleum secretary, on the sidelines of the inauguration of the new hydrocracker unit and expansion of IOC’s Haldia refinery.

The Centre had plans to offload a 10 per cent stake in IOC and five per cent in ONGC, and the move was expected to generate about Rs 24,000 crore in this financial year. IOC was supposed to raise Rs 9,000 crore and ONGC about Rs 14,405 crore through the offers. After divestment, the government’s stake in ONGC and IOC will drop to 74.14 and 78.92 per cent, respectively.

Saturday’s development comes on the backdrop of reports that the oil ministry might shelve IOC’s FPO due to fears that the higher subsidy burden on the company may affect investor sentiments and put pressure on its finances. The subsidy burden of IOC is higher than its net profit last year. The company has posted a net profit of Rs 1,906 crore in the first half of this financial year, but was not able to absorb a revenue loss.

Regarding the subsidy burden, the petroleum secretary said, “Every year, we are doing a burden sharing. It is decided at the end of the year and sometimes during the interim period. We will decide on it later.” He said there was no reason to fear about the financial aspects.

The Maharatna company on Saturday unveiled a Rs 2,869 -crore hydrocracker unit in Haldia and also upgraded the refinery by adding a capacity of 1.5 million metric tonnes per annum (MMTPA). The unit would manufacture high speed diesel conforming to BS III and BS IV standards.

Sunderashan expressed hope that the country’s total refining capacity would rise from 185 million tonnes to 240 million tonnes by the end of the 11th Five Year Plan.