New Delhi: An Empowered Group of Ministers (EGoM) is likely to meet soon to consider Oil and Natural Gas Corp's (ONGC) request to buy a 5 per cent stake in Indian Oil Corp (IOC) from the government at a lower price.
ONGC and Oil India Ltd (OIL) each want to buy a 5 per cent stake in IOC from the government at the six-month average traded price and not at the current rate.
"We are considering their request for a lower share price for the IOC stake purchase," a senior Oil Ministry official said. "We are talking to the Securities and Exchange Board of India to work out an off-market transaction."
The ultimate decision will be taken by an EGoM headed by Finance Minister P Chidambaram, he said.
Sources said the purchase of the 10 per cent stake that the government wants to disinvest in IOC was recently deliberated by the boards of ONGC and OIL.
They, however, felt that since the IOC scrip has shot up by 24 per cent from the time the government approved the stake sale, it would be better to do an off-market trade based on the six-month average share price.
IOC shares traded at Rs 257 on the BSE at 1145 hours.
The two companies have written to the Oil Ministry about their condition for the purchase of the 24.27 crore shares at a six-month average rather than the EGoM-approved rate of the current market price, plus/minus 1 per cent, sources said.
Oil Secretary Vivek Rae said last week that the 10 per cent stake will be split equally between ONGC and OIL.
The government expects to raise between Rs 4,800-5,000 crore through its 10 per cent stake divestment in IOC.
IOC shares have gained Rs 49 apiece since January 16, when the EGoM on disinvestment cleared the stake sale in the refiner through a block deal.
A trade with a minimum 5 lakh shares or a minimum value of Rs 5 crore executed through a single transaction on a separate window of a stock exchange constitutes a block deal.
A block deal order for a scrip should be within a range of 1 per cent from the ruling market price (last traded price).
ONGC already holds an 8.77 per cent stake in IOC.
The Cabinet had originally cleared the 10 per cent stake sale in IOC through an offer for sale. However, the Finance Ministry had to finally resort to the block deal route on account of stiff opposition from the Petroleum Ministry.
The oil ministry was of the view that IOC shares should not be sold at current prices because they do not reflect the right valuation of the company.