ONGC not to offload stake in IOC, GAIL

By agencies   |   Wednesday, 28 December 2005, 08:00 Hrs
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KOLKATA: As an immediate fallout of the Center disallowing ONGC to acquire assets in Nigeria, the exploration and production major has dropped plans to sell part of its equity stake in Indian Oil Corporation (IOC) and Gas Authority of India Limited (GAIL) during this year. The corporation holds 10 percent stake in IOC and 2.35 percent in GAIL. Earlier to this the company was considering to offload a part of its crossholdings worth about $1590.90 million in the two oil public sector units (PSUs) to finance the acquisition of 45 percent stake in South Atlantic Petroleum's Akpo oil and gasfield in Nigeria. However, the Cabinet Committee of Economic Affairs (CCEA) rejected the proposal. Tough the ONGC board allowed the company to offload its crossholding in IOC and GAIL in trenches, no such sale was expected this year. The Cabinet has already allowed the oil PSU to sell its crossholding in trenches. The ONGC official said, “We were considering an immediate sale of our investment in the two companies to finance the acquisition in Nigeria. Since the proposal is scrapped, there is no immediate need of funds.” Sources, however, pointed out that ONGC was pursuing an aggressive investment plan for greenfield and brownfield expansion of operations both at home and overseas, which may necessitate offloading crossholding at a later date. Meanwhile, the IOC plans an immediate sale of 2-2.5 percent stake in ONGC worth $681.81-840.90 million through block trading, to finance its investment plans, the company sources said.