IOC stake sale decision deferred after Oil Ministry opposition

A group of ministers headed by Finance Minister P Chidambaram on Thursday deferred a decision on disinvestment in Indian Oil Corporation following strong opposition to the stake sale by the Oil Ministry.

"It has been deferred," Oil Minister M Veerappa Moily told reporters after the meeting of the Empowered Group of Ministers in New Delhi.

While Moily refused to elaborate on the reasons for the deferment, sources said his ministry had raised concerns over pricing of IOC shares.

The EGoM may again meet next week, they said.

The Finance Ministry is aiming to garner Rs 4,500 crore (Rs 45 billion) by selling 10 per cent (19.16 crore shares) of the government stake in the oil major.

At today's closing price of Rs 198.95 on BSE, IOC has a market capitalisation of about Rs 48,000 crore (Rs 480 billion). This m-cap is after factoring in IOC's 7.69 per cent holding in Oil and Natural Gas Corporation worth Rs 17,9711.78 crore (Rs 1,797.11 billion)

at Thursday's closing price.

This leaves less than Rs 30,000-crore (Rs 300-billion) market value that is attributable to IOC.

This is less than the investment that IOC is putting in setting up a 15 million tonne refinery at Paradip in Odisha, the Oil Ministry feels.

Sources said the Ministry put these views at an inter-ministerial group of secretaries while opposing sale of 10 per cent stake in IOC.

Moily on earlier occasions has said the IOC cannot be sold when the scrip is way lower than the 52-week peak of Rs 375 reached on January 18 last year.

Investors at promotional roadshows in the US, the UK and Singapore questioned the timing of the stake sale as there is no clear roadmap yet to address the lingering fuel subsidy issue.

The Finance Ministry is keen on IOC stake sale to meet the fiscal's disinvestment target of Rs 40,000 crore.