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Govt. allows $5.5 B cross holding in oil PSU
By agencies
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Friday, 25 November 2005, 20:30 IST
NEW DELHI: The cabinet has allowed state owned oil companies to swap or offload their cross-holdings valued at $5.5 billion in the market.
Finance Minister P. Chidambaram said after a late-evening cabinet meeting that while some shares would be sold in the domestic equity market, others could be swapped between the companies.
India's top state-run energy companies - Indian Oil Corp., Oil and Natural Gas Corp. and GAIL (India) - have held stakes in each other since 1999, when the Indian government divested part of its equity in the firms. While IOC is keen to offload its stake in ONGC immediately, the latter has no such intention. GAIL, too, may hold on to its holding in ONGC.
ONGC, India's most valuable company, holds 9.6 percent of the equity in IOC, the country's largest refiner. Gas transmission firm GAIL holds 4.8 percent of both ONGC and IOC.
The petroleum and finance ministries would decide the quantum of equities to be swapped between the three PSUs or to be offloaded in the market after mutual consultation. Chidambaram said there was no rationale for the PSUs to maintain corss-holdings as they compete with each other now.
"The manner and the timing of offloading these cross-holdings are left to the oil firms who can take the decision keeping their fund requirement as well as market conditions in mind," the finance minister said.