India to raise $2bn from share sale in ONGC, IOC and OIL

The Indian Government is reportedly planning to divest $2bn worth of shares in Oil and Natural Gas (ONGC), Indian Oil (IOC), and Oil India (OIL), in order to meet its divestment target for this year.

Comprising a 5% equity stake in ONGC, 3% in IOC and 10% in OIL, the planned share sale is expected to raise Rs165bn ($2.3bn), economictimes.indiatimes.com reported citing unnamed sources.

The government currently owns a 67.48% stake in ONGC, 56.75% in IOC and 66.13% in OIL.

The government set a divestment target of Rs800bn ($11.15bn) for this financial year. 25% of the target has so far been realised.

The finance ministry is reportedly looking to pursue share sales and buybacks by the state-owned oil firms to push closer to the target.

Although there is no clarity on the timeframe, the sources revealed that the sale could be launched in a month.

India is also expected to raise Rs100bn ($1.39bn) from a share buyback programme by the oil firms, according to the publication.

OIL has disclosed in a regulatory filing that it will consider a buyback proposal next week, which is anticipated to raise nearly Rs11bn ($153.35m).

The sources added that ONGC and IOC may respectively buy back shares worth Rs48bn ($669.17m) and Rs40bn ($557.64m).

The boards of the oil companies are expected to soon consider proposals of a buyback.

The government recently sold a 3% stake in public coal mining company Coal India through the offer for sale (OFS) route.