Oil marketing companies get nod to buy stake in OIL
State-owned oil marketing companies – Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation – have got their respective board approval for buying equity stake in exploration firm Oil India Ltd (OIL). The three companies have informed the Bombay Stock Exchange of the development.
IOC board of directors has approved the purchase of 10.7 million equity shares, amounting to 5 per cent of OIL’s pre-issued paid up capital from the Government, the company said. BPCL has informed that its board has approved acquisition of 5.3 million OIL shares which is 2.50 per cent of the exploration company’s pre-issued paid up capital from the Government.
The OMCs will acquire the stake at a price equivalent to the issue price of the equity shares that are proposed to be offered by OIL to the public in accordance with the book building method. OIL had got Cabinet nod for fresh equity of 10 per cent of its paid-up capital through IPO along with a proposal of issuing additional one per cent of its paid-up capital to the employees of OIL.
In addition to these two, the Cabinet has also approved disinvestment of 10 per cent of OIL’s paid-up capital in favour of state-owned OMCs – Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum in the ratio of 2:1:1, respectively.
Disinvestment of shares in favour of state-owned OMCs, coupled with an initial public offer by Oil India, is expected to reduce the effective Government stake in the company to about 78 per cent from the existing 98.13 per cent. The disinvestment in favour of OMCs would not only strengthen their existing synergies but would also help them raise resources by disposing these shares in the open market at an opportune time to tide over their under recoveries.
Source:
