The much awaited ONGC divestment seems headed towards uncertainty as there is no word yet from the Government on what would be its subsidy sharing formula with the Maharatna company, even as the current fiscal is coming to an end. Sources privy to the development told The Pioneer that there is no clear roadmap on behalf of the Government as to what kind of arrangement will be in place in 2015-16 between Centre and ONGC on sharing the subsidy burden. Owing to this lack of direction, sources pointed out that the disinvestment exercise of the upstream company is likely to be delayed indefinitely.
Moreover, as reported by this newspaper on March 11, there is also lack of clarity over whether ONGC will be asked to shoulder the under-recovery burden of the Centre for the fourth quarter of the current fiscal or not. Though the amount for the fourth quarter comes to around Rs5,000 crore, and sources indicated that the Government may not ask ONGC to pay for the quarter, yet they added that there could be a last minute missive from the Finance Ministry asking the Maharatna company to shoulder the Centre’s burden, as happened in the third quarter of the current fiscal, when it had to shell out around Rs9,000 crore as under-recovery payment.
Though the free-fall in global crude prices also seems to be another reason behind the delay in ONGC’s disinvestment, as it has left a negative impact on the company’s shares, sources pointed out that the main reason is the uncertainty in deciding the subsidy sharing formula. Notably when the Government had conducted road shows for ONGC’s disinvestment in November 2014, the major concern among global investors was regarding lack of direction on part of the Indian Government on how much of the under-recovery burden the upstream company will be asked to shoulder for the current fiscal.
With the financial year now coming to end and there is still no word from the Government on the subsidy sharing formula, sources informed that ONGC’s disinvestment now seems headed towards uncertainty, for the time being at least. Government had planned to offload 5 per cent of its stake in ONGC, an exercise through which it was looking to pocket around Rs18,000 crore.
Till now during this fiscal, the Government has managed to garner only around Rs24,400 crore through stake sales in Coal India ltd (CIl) and SAIl. The disinvestment department is hard pressed for time to meet the FY15 disinvestment target of Rs43,425 crore. With not much time left, the Government’s plan of stake sales in some other major PSUs like Indian Oil Corporation (IOC), Bharat Heavy Electricals (BHEl), National Aluminium (Nalco) and Dredging Corporation (DCIl) - looks difficult to achieve. The Government plans to sell a 10 per cent stake in IOC, NMDC as well as Nalco, and 5 per cent stake each in BHEl and DCIl.