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Naik readies comprehensive selloff plan

New Delhi, Aug. 29: Petroleum minister Ram Naik wants to place before the Cabinet Committee on Disinvestment—which is scheduled to meet in the first week of September—a comprehensive plan of the divestment options prepared by his ministry for various state-run oil sector companies.

Firstly, Naik wants the government to take a decision on whether HPCL and BPCL’s public issues should precede a strategic sale in these companies or not. In the presentation to be made before CCD, the petroleum ministry will be arguing that such an issue will increase the share value considerably and give the government a better realisation when it actually goes for a strategic divestment.

The petroleum ministry will also argue that this method will provide the best and most reliable way of testing whether the valuation exercises done by the merchant bankers can stand up to scrutiny or not.

Sources said Naik has already informed Prime Minister Atal Bihari Vajapyee that he felt the move to bar state-run companies from particpating in the bidding process of HPCL and BPCL should be reviewed. Naik will also be seeking permission to sell a 10 per cent government stake in Indian Oil in the retail market and make a public issue for another 10 per cent in the petroleum marketing major.

This apart, the petroleum ministry wants to club the sale of Indian Oil Corporation’s holding in Oil and Natural Gas Corporation and Gas Authority of India with the disinvestment ministry’s proposal of offloading up to 25 per cent government equity in ONGC and Gail to retail investors.

As part of the move to untangle the cross-holdings, IOC will sell half of its 9.61 per cent stake in ONGC and 4.8 per cent in Gail.

The ministry will also show comparative slides to show how much money can be earned by flogging the shares domestically and how much through GDRs/ADRs.

IOC is likely to net about Rs 2,645 crore from the sale of 6.85 crore shares in ONGC at the current price of Rs 365.55, and 2.04 crore shares of Gail at the ruling price of Rs 70.85. On the other hand, the IPO should fetch IOC about Rs 1,600 crore.

At the same time, the ministry is likely to seek permission from the Union Cabinet to allow Oil India Ltd to buy another 41 per cent stake in Numaligarh Refinery on top of its current 10 per cent. This equity will be bought from BPCL and Naik wants this to happen before the disinvestment process kicks off.

At the same time it wants ONGC to be given permission to buy out HPCL’s stake 37.5 per cent Managlore Refinery and Petrochemicals Ltd.

The exploration giant is already in talks to buy out Aditya Birla’s stake in the refinery and petrochem company.

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