New Delhi, Sept. 16: The Rs 12,000-crore follow-on public offer of Oil and Natural Gas Corporation has been deferred because of pricing disagreement between the government and the managers of the issue.

The FPO was supposed to open on September 20 but has been put off because of the market condition, an ONGC official said. However, sources said disagreement over pricing and lack of a transparent subsidy- sharing formula had led to the flotation being deferred for the fourth time.

ONGC wanted to price the issue at Rs 280 apiece or more, while merchant bankers believed Rs 240-250 would be more lucrative for investors.

The government had in January appointed Citigroup, Nomura Holdings, Bank of America Corp, HSBC Holdings, JM Financial Services and Morgan Stanley to manage the share sale.

There were concerns that a lack of clarity on ONGC’s subsidy to PSU oil retailers would impact the issue at a time global crude prices had spiked and the rupee had depreciated against the dollar, hitting the finances of the retailers.

A group of ministers, headed by finance minister Pranab Mukherjee, was slated to meet today to fix the price band for the FPO, but the meeting has been postponed. Officials said a decision on the timing of the FPO could be taken by the end of this month.

after the issue price differences are resolved.

The government plans to sell 5 per cent, or 427.77 million shares, through the offer.

After the FPO, the government's stake in ONGC will come down to 69.14 per cent from the current 74.14 per cent.

The FPO was originally planned for 2010-11 fiscal but was deferred to April 5 as the company did not have adequate number of independent directors on its board to meet the SEBI's listing norm. It was then scheduled for July 5 but was again deferred because of market conditions.

The government has so far raised a little over Rs 1,144 crore by offloading stake in the Power Finance Corporation.

It had planned to garner over Rs 15,000 crore through share sale of PFC, SAIL, ONGC and Hindustan Copper Ltd. Other firms in the government’s radar were RINL, MMTC and NBCC, but could be postponed due to current financial turmoil.

Ends

The ONGC scrip today settled at Rs 274.70, up 5.61 per cent on the BSE.