Divestment Ministry on Friday said it has received in-principle clearance from Petroleum Ministry and is going ahead with the sale of government equity in Oil India Ltd (OIL).
"Correspondence was going on for last six months... We got Petroleum Ministry in-principle approval yesterday for disinvestment in OIL. We have to work out the details," Disinvestment Secretary Mohammad Haleem Khan said.
The total shares that the government will sell in OIL are yet to be decided, he said, adding, "the process of inter-ministerial consultation is on."
The government owns 78.43 per cent in OIL. OIL had in September 2009 hit the market with an initial public offer and had mopped up over Rs 4,900 crore (Rs 49 billion).
As part of the IPO, the government offloaded its 10 per cent equity, while company issued 11 per cent fresh equity. Khan further said that the government has identified GAIL (India) Ltd as a possible candidate for stake sale.
He, however, did not mention if the OIL and GAIL issue would be done in the current fiscal.
The government aims to raise Rs 40,000 crore (Rs 400 billion) through the sale of stakes in state-run companies in the current fiscal, but it has so far been able to mop up only Rs 1,145 crore (Rs 11.45 billion)
Khan said the government would stick to the public offer route for stake sale in ONGC and BHEL, in which it plans to divest 5 per cent stake.
The divestment of BHEL is held up for want of adequate independent directors on board, while in case of ONGC some directors are retiring, an official in the finance ministry said.
Clause 49 of the Sebi regulations mandates that half of the company's board should comprise independent directors.
BHEL, which has already filed draft papers with Sebi for a Rs 4,000 crore (Rs 40 billion) follow on offer last month, needs two more independent directors on board.
Besides, through disinvestment in blue-chip oil company ONGC the government aims to mop up about Rs 12,000 crore (Rs 120 billion).
The official further said that the government is looking at other options, including private placement and buy back, to achieve the disinvestment target for the current fiscal.
Under the buyback mode, the government can raise money by selling its equity in the company to the concerned PSU itself. The ministry is also considering asking cash rich PSUs to buyback shares.
