The government has asked its biggest state-owned firm Oil and Natural Gas Corporation to list its overseas unit ONGC Videsh on the stock exchanges as part of the push to raise more resources through disinvestment of shares.
Govt tells state oil firm ONGC to list overseas unit
Department of Investment and Public Asset Management has written a letter to ONGC stating that a listing would also help unlock value in the unit by improving its corporate governance and efficiency.
The letter, sent last week, did not state how much of ONGC should be offered to outside investors.
The letter said any state-owned firm with a positive net worth and no accumulated loss should be listed to unlock value. The listing would help the government meet its divestment targets and make up for a failed plan earlier this year to sell a stake in national carrier Air India.
The government holds a 67.45 per cent stake in ONGC Videsh’s parent ONGC and gains from a listing could be transferred to the government via a special dividend.
ONGC Videsh, a 100 per cent subsidiary of ONGC, suffered losses during the low crude price environment between 2014 and 2017 but its earnings have since recovered.
The company has investments in 11 producing assets in countries including Russia, Brazil and Iran. The firm posted a net profit of $152 million and contributed 5 per cent to ONGC’s overall net earnings in the latest fiscal year ended March 2018.
ONGC had helped the government meet its disinvestment target last fiscal when it bought a 51.11 per cent stake in state-owned Hindustan Petroleum Corp Ltd (HPCL) for Rs 36,915 crore.