New Delhi, Feb. 13: State-owned upstream companies ONGC and Oil India will buy the 10 per cent government stake in refiner Indian Oil Corporation (IOC) at a discount of 10 per cent through an off-market deal.
“The IOC stake sale will be an off-market deal. The price will probably be at a 10 per cent discount to the current market price,” an official said.
Earlier this month, the boards of ONGC and Oil India had conveyed to the oil ministry that they were willing to buy a 5 per cent stake each at a six-month average trading price of IOC and not the current market price, which had spiked since the selloff decision.
The IOC shares have gained Rs 36 apiece since January 16 when the empowered group of ministers (EGoM) on disinvestment cleared the stake sale in the oil marketing company through a block deal.
The final price for the off-market deal is expected to be decided by the EGoM, headed by finance minister P. Chidambaram, early next month.
The government hopes to garner over Rs 5,000 crore through the stake sale.
IOC has suffered a net loss of Rs 961.45 crore in the third quarter of this fiscal as the oil subsidy offered by the government was less than half of its due, neutralising the foreign exchange gains.
The company suffered losses “mainly on account of a higher absorption of under-recoveries on the sale of sensitive petroleum products,” IOC chairman R.S. Butola said.
IOC had a net profit of Rs 3,331.96 crore in the same period a year ago.
The company had to absorb an under-recovery of Rs 7,192 crore, out of the total loss of Rs 20,697.62 crore on the sale of diesel and cooking fuel below cost during the third quarter.
The government paid Rs 5,173 crore as cash subsidy and it got another Rs 8,261 crore from upstream firms such as ONGC, leaving an unmet gap of Rs 7,192 crore, Butola said.
But for this, the company would have posted a profit as its interest on debt came down to Rs 1,262 crore from Rs 1,677 crore in the third quarter of the last fiscal.
The company also made an exchange gain of Rs 1,133 crore as the rupee strengthened against the dollar. IOC had lost Rs 1,295 crore in foreign exchange in the third quarter of 2012-13.
ONGC has reported a 28 per cent rise in net profit during the December quarter as the depreciation of the rupee helped it to realise more revenues, which neutralised a near-record subsidy payout.
Net profit in October-December rose to Rs 7,126 crore from Rs 5,563 crore a year ago, ONGC chairman and managing director Sudhir Vasudeva said.