Government May Cut Stake In Indian Oil To Below 51%: Report
India plans to reduce its stake in Indian Oil Corp. to below 51 per cent while ensuring the government and state-run companies retain control of the nation’s largest oil refiner, people with knowledge of the matter said.
Prime Minister Narendra Modi’s cabinet will consider, as early as next week, a proposal to sell shares in some companies, including Indian Oil, to below 51 per cent, the people said, asking not to be identified as the plan is not public. India directly holds 51.5 per cent in Indian Oil, and another 25.9 per cent through state-run Life Insurance Corp. of India, and explorers Oil & Natural Gas Corp. and Oil India Ltd.
Sluggish revenue collections has left PM Modi’s administration with little choice but to push ahead with a plan to raise a record Rs. 1.05 lakh crore ($14.6 billion) through asset sales in the financial year through March. A slippage will put the government’s goal of capping its budget deficit at 3.3 per cent of gross domestic product at risk, and prompt rating companies to put India’s credit score on a path for a downgrade to junk.
Government can sell as much as 26.4 per cent of its holding in Indian Oil — valued at about Rs. 33,000 crore — and still retain indirect control. Finance ministry spokesman Rajesh Malhotra could not be immediately reached for a comment.
The South Asian nation is likely to start selling shares in Indian Oil through an exchange-traded fund in January, according to the people. The ministers’ panel is also expected to take up other crucial proposals such as privatization of Bharat Petroleum Corp., Shipping Corp. of India and Container Corp. of India, they said.