New Delhi, Jan. 7: The government is likely to go ahead with the stake sale of Indian Oil Corporation (IOC), though the state-owned company and the oil ministry are vehemently opposed to the proposal.
The empowered group of ministers, headed by finance minister P. Chidambaram, will meet on Thursday, and indications are that the government is likely to go ahead with the divestment to meet its fiscal deficit target.
Sources in the petroleum ministry said they would strongly advocate for the postponement of the sale as market conditions were not appropriate.
The government plans to sell a 10 per cent stake in IOC, which is likely to yield about Rs 4,000 crore.
The sale is crucial to meet the divestment target of Rs 40,000 crore for 2013-14, which should put a lid on fiscal deficit at the targetted 4.8 per cent of the gross domestic product.
During April-November, fiscal deficit has touched Rs 509,557 crore, or 93.9 per cent of the annual target.
The IOC scrip closed at Rs 199.90, down 2.20 per cent, on the Bombay Stock Exchange today. The shares had touched a high of Rs 430 in late 2009 and last year’s 52-week high was Rs 375. At present, the government holds 78.92 per cent in the company.
On the National Stock Exchange, the scrip settled at Rs 198.45, down 2.98 per cent from the previous close of Rs 204.55.
The disinvestment department has selected five merchant bankers — Citibank, HSBC, UBS Securities, SBI Capital and JM Financial — for the stake sale.
The roadshows in Mumbai and Chennai had faced criticism over the timing of the selloff, while in the UK, the US, Hong Kong and Singapore it failed to attract investors.
Major funds such as JP Morgan, Templeton, Wellington Management, Aberdeen Asset Management and T Rowe Price did not meet the IOC team. Others, too, did not show any interest in the company, industry sources said.
The government has so far raised Rs 1,325 crore from divestments in MMTC, Hindustan Copper, National Fertiliser, ITDC, State Trading Corp and Neyveli Lignite. PowerGrid, NHPC and Engineers India are also in the selloff queue in 2013-14.