Cash chase

New Delhi, Nov. 21: State-owned refiner Indian Oil Corporation (IOC) has sought the oil ministry’s approval to dilute a portion of its stake in ONGC.

Sources said the PSU refiner had sought permission to sell 35 per cent of its 7.69 per cent equity holding in ONGC.

IOC is expecting over Rs 6,000 crore from the sale, which could be used to buy out the Bengal government’s 39.9 per cent stake in Haldia Petrochemicals (HPL), the sources said.

IOC has emerged as the sole bidder, valuing HPL’s shares at around Rs 1,700 crore.

According to a PTI report, IOC has indicated that it wants the entire stake in HPL at one go, a development which may delay the Bengal government’s stake sale in the troubled firm.

IOC’s holding in ONGC will be reduced to 5 per cent after the sale.

IOC had acquired a 9.61 per cent equity in ONGC in 1999-2000. In 2006, it had sold 20 per cent of its equity through a bulk deal.

The sources said IOC is considering to use the proceeds to fund its exploration and production activities.

The move comes at a time the government plans to sell 10 per cent of its stake in the refiner to achieve its Rs 40,000-crore divestment target for 2013-14.

IOC chairman R. S. Butola had recently stated that the department of divestment was assessing the market conditions at the roadshows and would take a call based on the response.

The state-run refiner is not in favour of a sale now as it feels the company’s share price is “unduly depressed”.

IOC’s borrowings have increased to Rs 80,894 crore in 2012-13 from Rs 52,734 crore in 2010-11.

At present, the borrowings are at around Rs 81,000 crore and are expected to remain high because of under-recoveries and capex plans.

The working capital requirement is also expected to increase further with the commissioning of the Paradip refinery in Odisha.

The projected capex of the company during the Twelfth Plan comprises Rs 56,200 crore as planned expenditure and Rs 18,740 crore as non-plan expenditure.

The firm also plans to invest Rs 50,000 crore in expanding its refineries and setting up a new one on the west coast.