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Richa Mishra

New Delhi , Dec. 28

THE board of Indian Oil Corporation Ltd today approved offloading the equity investment of the company in Oil and Natural Gas Corporation Ltd (ONGC) and GAIL (India) Ltd.

Sources told Business Line that the IndianOil board has approved divesting its stake in ONGC up to 20 per cent and up to 50 per cent in GAIL, subject to approval of the competent authority, in this case the Ministry of Petroleum and Natural Gas.

Sources in the company, however, declined to elaborate on the method to be adopted for offloading. The company holds 9.6 per cent stake in ONGC worth roughly Rs 15,000 crore — a five-fold growth since 1998.

The Government had in November given in-principle nod to oil PSUs ONGC, IndianOil and GAIL to offload the cross-holdings in each other. ONGC holds 9.1 per cent of IndianOil and 4.8 per cent of GAIL's equity, while IndianOil holds 9.6 per cent of ONGC and 4.8 per cent of GAIL's equity.

GAIL, in turn, holds 2.4 per cent in ONGC. This decision to offload was taken as oil PSUs felt that investments were locked in small holdings without serving any business or strategic purpose.

The offloading was expected to meet the requirement of funds by these PSUs for capital expenditure. The current market value of the holdings is estimated to be over Rs 25,000 crore.

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