ONGC ibanks against FPO without clarity on subsidy sharing

Investment bankers have suggested that Oil and Natural Gas Corporation (ONGC) should not go ahead with the follow-on share sale unless there is some clarity on the subsidy sharing formula for financial year 2012. CNBC-TV18's Nayantara Rai reports. 

The finance ministry is working on the subsidy sharing formula for the company. ONGC officials met bankers on Friday and discussed the investment climate for the Rs 11,500 crore FPO.
The feedback was not in favour of FPO coming out unless there is clarity on the subsidy sharing mechanism. It has been the biggest overhangs on the stock. In the last fiscal ONGC actually had to bear of subsidy burden of little over 38% versus the norm of 33%.
Sources say Finance Ministry is putting together a package or a formula for subsidy sharing but there is final word on it yet.
Meanwhile, ONGC has also been very clear on the issue saying it is a government selling its stake and not the company issuing fresh equity. 
The Disinvestment Department is yet to finalise the date for the FPO. However, the company may file the red herring prospectus by June 28.