India govt mulls selling $3b Oil and Natural Gas Corp stake

The nationalist leader won May’s parliamentary election by a landslide with a pledge to create jobs and revive Asia’s No.3 economy, which is suffering from weak growth and high inflation.

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By (Reuters)

Published: Wed 16 Jul 2014, 10:24 AM

Last updated: Fri 3 Apr 2015, 8:42 PM

Indian Prime Minister Narendra Modi’s government will decide next month on the sale of a $3 billion stake in state oil firm Oil and Natural Gas Corp (ONGC), in a major test of whether he can follow through on reforms outlined in his first budget.

The nationalist leader won May’s parliamentary election by a landslide with a pledge to create jobs and revive Asia’s No.3 economy, which is suffering from weak growth and high inflation.

Yet Finance Minister Arun Jaitley’s maiden budget last week drew criticism that his fiscal arithmetic did not add up.

Capitalising on a record-breaking stock market run to complete asset sales could help him balance the books. The government will decide in August whether to sell a five per cent stake in ONGC, a senior oil ministry official said, in a deal that would be worth $2.9 billion at current market prices. “The department of divestment has floated a note seeking our comments for a five per cent stake sale in ONGC,” the official, who has direct knowledge of the matter, told Reuters on Tuesday. An official at the finance ministry, home to the divestment department, said the government was interested in selling stakes in ONGC and other state companies given their high market valuations.

He did not elaborate. If completed, the sale would raise more than a quarter of the $10.5 billion target for asset sales announced by Jaitley for the fiscal year to March 2015.

The proposal to sell a five per cent stake follows reports that the government may sell a stake of as much as 10 per cent in ONGC, which produces the equivalent of 1.2 million barrels per day, or two-thirds of India’s oil and gas.

The state directly owns 69 per cent of ONGC, while further stakes are owned by the state-run Life Insurance Corporation of India (LIC) (7.8 per cent), Indian Oil Corp (7.7 per cent) and Gas Authority of India (2.4 per cent).

(Reuters)

Published: Wed 16 Jul 2014, 10:24 AM

Last updated: Fri 3 Apr 2015, 8:42 PM

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