Riding on the success of SAIL disinvestment, the Centre is planning to divest 5% stake in oil exploration major ONGC in January to help bring down the budget deficit, as tax collections continue to remain tepid.
On offer are 42.77 crore shares using the auction route or offer-for-sale route through the stock exchanges; the mechanism was successfully deployed in the SAIL disinvestment resulting in the issue being oversubscribed by more than two times.
The Centre is likely to raise ₹14,900 crore through the ONGC stake sale. It currently holds 68.94% in the company. It proposes to reserve 20% of the offer size for retail investors, with a 5% discount on the offer price.
Subsidy Sharing Mechanism
The Centre is working on a subsidy sharing formulae, a mechanism to compensate oil marketing companies for selling their crude oil derivatives at a discount to the public.
ONGC contributes to almost half of the under-recoveries, which has an impact on its profitability.
In the first half of the current fiscal, ONGC has taken an hit of ₹26,841 crore, reports Business Line.
The government has taken cognisance of the concerns raised by potential investors in the subsidy-sharing mechanism and looking at various options to resolve the issue.
Post the ONGC stake sale, the Centre is likely to go ahead with stake sale in Coal India and NHPC.
