Besides Oil and Natural Gas Corporation (ONGC), Modi government's divestment plan includes Oil India Limited (OIL) and GAIL (India) Limited to help raise funds to bridge the fiscal deficit. Finance minister Arun Jaitley discussed the stake sale with minister of state for petroleum and natural gas Dharmendra Pradhan on Thursday.
With the crash in international crude prices, oil exploration and extraction companies have seen their share prices plummet. ONGC has seen its price go down from ₹472 in June 2014 to ₹341.60 on Thursday -- a drop of almost 28%.
The fall in price would limit the government's capability to monetise the true value of the stock, with the current prices adding to the government's coffers by only about ₹15,000 crore, against the projected ₹17,000 to ₹18,000 crore.
The timing of ONGC divestment would be decided by the Department of Disinvestment, said Pradhan.
The subsidy sharing ratio is being reworked to limit the upstream oil companies underwriting the revenue loss incurred on selling cooking fuel and diesel until recently at government-controlled rates.
The oil ministry sought ONGC and OIL's subsidy burden share on LPG and kerosene to be reduced to the extent of statutory oil cess payable by the organisations.
For the current fiscal, the oil cess is expected to net ₹10,500 crore. ONGC and OIL have together contributed ₹31,926 crore in the first half of the fiscal on fuel subsidy. If the ministry's proposal gains acceptance, the companies would need to pay no more than ₹8,000 crore for the reminder of the fiscal, said Business Today.
ONGC was trading at ₹343.50 up by 1.70 or 0.56%% at the time of reporting 11.48am.
OIL was trading at ₹555.95 up by 5.65 or 1.03% at the time of reporting 11.49am.