The current fiscal's second biggest item on the Government's disinvestment agenda -its 10 per cent stake sale in Indian Oil Corporation ltd (IOC) - is to be launched in November this year and the road shows are scheduled to begin in October, Finance Ministry sources have confirmed.
According to these sources, the IOC stake sale through which the Government plans to raise Rs 5,000 crore, will happen before the ambitious Coal India ltd (CIl) disinvestment which is currently on the backburner owing to labour unrest in the Maharatna company over the issue.
The decision was taken after a recent meeting between the Finance Minister P Chidambaram and Disinvestment Department officials, sources said.
It was decided to bring in IOC's disinvestment before CIl, as the oil marketing company's shares are currently trading in the range of Rs 229-230 per share, an improvement from last month's price of Rs 193 per share.
The Government had planned IOC's disinvestment at a share price of Rs 290 per share, which would have brought in Rs 5,000 crore in its kitty. However around the first week of August (the Union Cabinet cleared IOC's disinvestment on August 2, 2013), its share price was trading in the range of Rs 190-193 per share, which would have brought in only Rs 3,695 crore to the Centre.
Now by bringing in IOC's disinvestment in November, the Government's desperation to fuel its divestment target seems quite visible, sources said, especially as the CIl stake sale on which it was banking heavily and which would have alone brought inRs 20,000 crore to it, has failed to take off.
The Government's desperation is even more evident in the light of the fact that IOC had reported a net loss of Rs 3,093.23 crore for the April- June quarter of the current fiscal on not being fully compensated for selling fuel below cost, and the rupee depreciation drilling a hole in its balance sheet.
Thus with the rupee still on a sticky wicket and the global crude prices showing sharp fluctuations over the past month, it would be quite difficult to predict how the IOC's share price position would pan out in November (by which time its second quarter results would also be out).
The Government though is left with hardly any options but to bring in IOC's disinvestment, sources said.
Till now in the current fiscal, the Government has managed to collect only Rs 1,300 crore by divesting its stakes in entities like Neyveli lignite Corporation (NlC), State Trading Corporation (STC), MMTC, and ITDC. Its disinvestment target for the current fiscal is Rs 40,000 crore.
The CIl stake sale - the biggest of them all - was to happen a couple of months back, however vehement opposition to the Government's aim to sell of its 10 per cent share in the coal behemoth by its various unions (which have also threatened nation-wide stir against it), has now forced it on the backburner.
The IOC disinvestment was the second biggest agenda on the Government's disinvestment radar for FY14 after CIl, and it was keen to sell of its stake in both CIl and IOC within the first quarter of the current fiscal, an exercise which alone could have brought in Rs 25,000 crore in its coffers, thus substantially covering its total disinvestment target of Rs 40,000 crore.
Thus now by hastening IOC's disinvestment even as the market conditions don't look so favourable, the Government has chosen to bite the bullet in a bid to fuel its coffers.