Government may sell IOC stake to PSUs
New Delhi   11-Jan-2014

With the petroleum ministry refusing to offload Indian Oil Corporation shares in the market, the government is exploring other options, including selling them to other public sector companies. "The oil ministry is unwilling to sell any shares in the market, arguing that there is a decline in value, but it is open to the idea of offering them to other state-run entities," said a senior government official, who did not wish to be identified.

Sources told Times of India that the option is expected to be discussed at the next meeting of the empowered group of ministers (EGoM) headed by finance minister P Chidambaram. The sale of shares to public sector companies is seen as a compromise formula as it will help the government generate resources at a time when the finance ministry is looking for every penny to bridge the gap between revenue and expenditure. At the same time it will address the petroleum ministry's concerns over selling family silver at a discount.

In the past too, the government has used the route to deal with some of the contentious stake sale proposals. For instance, at the start of its first term, UPA auctioned government-owned shares in what was then Maruti Udyog Ltd (now, Maruti Suzuki) to state-run banks and financial institutions such as Life Insurance Corporation and State Bank of India.

Officials said that public sector companies which would be asked to buy IndianOil shares have not been identified. In the past, the government has sold shares in oil companies to other refiners and upstream companies such as ONGC and GAIL (India).

The latest move follows oil ministry's stiff opposition to the government's proposed share sale in IndianOil. The government is hoping to raise around Rs 4,500 crore by selling a 10% stake or over 19 crore shares. Moily and his team have argued that this is not the best time to sell the shares in the market as they are trading at a discount of over 45% to its 52-week high of Rs 375, which was seen on January 18 last year. IndianOil shares closed 1.4% higher at Rs 200 on the BSE.