Government Asks ONGC To List Overseas Arm On Bourses

The government has asked Oil & Natural Gas Corporation Ltd. to list its overseas investment arm, ONGC Videsh Ltd., on the stock exchanges and transfer proceeds to it in the form of a special dividend, helping meet its disinvestment target.

The listing of ONGC Videsh will help unlock value by improving its corporate governance and efficiency, according to a letter written by Department of Investment and Public Asset Management to ONGC management last week.

ONGC had helped the government meet its disinvestment target last financial year when it bought a 51.11 per cent stake in state-owned Hindustan Petroleum Corporation Ltd. for Rs 36,915 crore.

After failing to find a buyer for Air India, the public asset management department is again looking at ONGC to meet the Rs 80,000-crore revenue mobilisation target set out for it in the Budget for 2018-19 from the sale of government stake in public sector undertakings.

As on July 5, the government has realised Rs 9,219.91 crore as disinvestment proceeds against the budgetary target of Rs 80,000 crore, according to the department of public asset management.

ONGC Videsh, 100 per cent owned by ONGC, has so far invested Rs 1.5 lakh crore ($28.36 billion) in 41 projects it has across 20 countries.

In the letter, the public asset management department said PSUs with a positive network and no accumulated losses should be listed to unlock value. It, however, did not state how much stake in ONGC Videsh should be sold for its listing.

The Securities and Exchange Board of India calls for a minimum 25 percent public float for a listed company.

Officials said, proceeds of the listing of ONGC Videsh will accrue to its parent but the government will seek a special dividend to reap that.

The government owns 67.45 percent in ONGC. If ONGC were to declare the entire proceeds of listing as a special dividend, the government will get 67.45 percent of it.

The government had in 2015 as well asked ONGC to list ONGC Videsh. But the state-owned firm had at that time told the government that it was not the right time to list as oil prices were subdued and the company will not get the right value. Oil prices have since rebounded and the government is looking to cash in on that.

Under its portfolio, ONGC Videsh has reserves of 711 million tonnes of oil and oil equivalent natural gas.

In 2017-18, it produced 9.35 million tonnes of crude oil, up from 8.43 million tonnes in the previous year. Together with natural gas, the output was 14.16 million tonnes of oil equivalent, up from 12.80 million tonnes in the previous year.

It reported a net profit of Rs 981 crore on a turnover of Rs 10,418 crore in 2017-18. That compares with a net profit of Rs 701 crore on a turnover of Rs 10,080 crore in the previous fiscal. It had reported a net loss of Rs 3,633 crore in 2015-16 due to a sharp drop in oil prices.