Govt okays ONGC stake sale, auction on March 1

The EGoM, according to sources, has decided to fix a floor price for ONGC stake sale at Rs 290 per share of face value of Rs 5.

New Delhi: Running against time to meet the Rs 40,000-crore disinvestment target, the Centre Tuesday decided to offload five percent stake in ONGC through auction route on March 1 at a likely floor price of Rs 290 a share that could fetch the Exchequer about Rs 12,000-13,000 crore.

"The ONGC stake sale through the auction route (will take place) in couple of days," Oil Minister Jaipal Reddy told reporters after a meeting of the Empowered Group of Ministers (EGoM) which was chaired by Finance Minister Pranab Mukherjee.

The EGoM, according to sources, has decided to fix a floor price for ONGC stake sale at Rs 290 per share of face value of Rs 5.

The day-long auction, will take place on March 1 between 9.15 am and 3.30 pm, they said, adding that the floor price has been indicated in notices to stock exchanges tonight.

The government owns 74.14 percent stake in ONGC and proposes to offload 427.77 million shares or 5 percent equity. The sale, in which financial institutions are expected to participate, may fetch the hard-pressed government about Rs 12,000-13,000 crore this fiscal.

The shares would be sold to institutional as well as retail investors on the "price priority" basis.

The ONGC share, which witnessed huge volatility during the day, closed 1.02 percent up at Rs 283.55 a piece on Bombay Stock Exchange (BSE).

The government in the Budget for 2011-12 had envisaged to raise Rs 40,000 crore through PSU disinvestment, but in about 11 months it could mop up only Rs 1,145 crore from stake sale in the Power Finance Corporation (PFC).

In November, the government had put on hold the proposal to sell 5 percent of its stake in ONGC through public offer.

It also postponed stake sale in several state-owned companies on account of poor stock market conditions.

The EGoM, at its meeting earlier in the month, also decided to postpone equity sale in the engineering major BHEL to next fiscal.

Capital market regulator Securities and Exchange Board of India (Sebi) has issued norms allowing promoters to sell stake by way of auction, through a separate window on the Bombay Stock Exchange and the National Stock Exchange, which has to be completed within a day.

The auction route or 'offer for sale of shares by promoters' involves very little paperwork and the whole process can be done within one trading day.