Divestment dept to decide on ONGC FPO in few days: Sources

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Divestment dept to decide on ONGC FPO in few days: Sources

As the government grapples with a huge revenue gap, there finally seems to be some action on the disinvestment front. CNBC-TV18 learns that the much delayed ONGC follow-on public offer (FPO) might see the light of the day soon, reports CNBC-TV18's Aakanksha Sethi.

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As the government grapples with a huge revenue gap, there finally seems to be some action on the disinvestment front. CNBC-TV18 learns that the much delayed ONGC follow-on public offer (FPO) might see the light of the day soon. Sources add that the government is considering buybacks and minority stake sales in some other PSUs, reports CNBC-TV18's Aakanksha Sethi.

The ONGC FPO will depend on market conditions. Department of Disinvestment is expecting markets to recover by December. Hence, they will take a call on that ONGC FPO in the next three-four days.

A buyback has been spoken for ONGC. But sources in the Department of Disinvestment clarified that they have approval from the cabinet for an FPO.

The government has a Rs 40,000 crore disinvestment target to achieve and only about 3% of that has been done. Hence, officials in the Department of Disinvestment say that in the next one week they are going to take a final decision on this. They are hoping that the market conditions will enable them to go ahead with the ONGC FPO.

Also, in the SAIL FPO, SAIL is not interested in raising fresh equity. So, the government is likely to go ahead with just the disinvestment. It has cabinet approval for a 10% disinvestment, 10% fresh equity. And that was to be done in two tranche. Now, it's going to go back to the cabinet for a fresh approval for just disinvestment. Sources say that this could be at 15%. That proposal is going to the cabinet.

Also, to meet that disinvestment target, since the markets have been volatile, the government is now considering auctions of the sort that was done for Maruti in 2006, and is also considering buybacks. These are proposals that will require cabinet approval. So, cabinet proposal is also being worked on and the companies that will go in for auctions or buybacks.

Also, for Hindustan Zinc and BALCO , which have been under arbitration, the government is now considering selling the residual stake. This is a decision that will be Prime Minister's. The government is going to talk to Vedanta about this and discuss the sale of the residual stake.

This case had been in arbitration for the valuation of the company whether it would be at current market price or it will be at the price that was decided earlier. Sources in the Department on Disinvestment say that it should be at current market price. So that's something that is likely to be resolved by the Prime Minister himself.