India Plans Sale of 5% of State Oil Company, ONGC
In a report credited to Reuters , the Indian government is said to be about to announce the sale of a 5% stake in the state-owned oil fi...
https://automology.blogspot.com/2014/07/india-plans-sale-of-5-of-state-oil.html
In a report credited to Reuters, the Indian government is said to be about to announce the sale of a 5% stake in the state-owned oil firm, ONGC. According to the report, there is a note being circulated in government circles by the aptly named Department of Disinvestment, which is a part of the Finance Ministry. At Monday’s closing of ₹412 a share (approximately US$6.85), this would value the sale at about US$2.9 billion.
Prime Minister, Narendra Modi, has outlined a series of reforms that his new government wants to enact to create jobs and kickstart economic growth, which has spluttered, and to do this they need some US$11 billion, as outlined in the Finance Minister Arun Jaitley’s maiden budget of last week. Thus, selling a stake in the country’s biggest oil and gas exploration company would raise almost a quarter of this and is therefore essential if the new government wants to keep the country's budget deficit in check.
To make ONGC a more attractive investment, one official said, the government may look at having the company spin off its non-core businesses, such as running power plants and producing petrochemicals, which do not seem to fit naturally in the portfolio of an exploration company.
Even if the decision to sell is made soon, the sale wouldn't happen until the second half of the fiscal year, the official said, as investors will first want to hear whether the government will go ahead with plans to increase the government-controlled price of natural gas, which it has already announced will be deferred for at least three months.
image: Wikipedia