The disinvestment money has hardly been used for any res. Government today cleared 5 per cent disinvestment in oil major ongc, which may fetch the exchequer about rs 18,000 crore. Aviation minister the government is committed to the disinvestment of national carrier air india and the plan is to make it more operationally viable before disinvesting it, civil aviation minister hardeep singh puri told the. Govt may continue to opt for the auction method the. Ambitious plan by government of raising money from disinvestment. The methods being used by the government to windowdress the fiscal deficit will fool no one, least of all. With lic sitting on rs 40,000 crore, ongc, coal india disinvestment simply cannot fail businesseconomy r jagannathan dec 21, 2014 15. What is the strategic disinvestment of both hpcl and bpcl. Government set to hit divestment goal 1st time post rs 36,915 crore ongchpcl deal.
According to sources, the cabinet committee on economic affairs ccea, headed by prime minister narendra modi, has cleared the ongc stake sale proposal. The government has already selected merchant bankers for managing ongc and nhpc disinvestment and is in the process for doing so for cil. Lic saves ongc from flop show nation news issue date. Absent the sale of an asset, disinvestment also refers to capital expenditure reductions, which can facilitate the reallocation of resources to more productive areas within an organization or governmentfunded. Ongc, which had to borrow rs 24,876 crore for the acquisition that helped the government meet its disinvestment target for the 201718 fiscal, first raised the issue of being formally recognised as a promoter of hpcl in august last year.
In a disinvestment or, for that matter, even in an ipo, it is always prudent to price the offer in such a way that there is something left on the table for investors. The move is a doubleedged sword as ntpc has hardly any cash balance on its books. The policies of the government in the disinvestment arena were mostly expressed as announcement during budget presentations. Ongc disinvestment advanced to march 2011 the hindu. Sales of a 10 per cent stake in coal india and five per cent in ongc could be enough for the government to meet its target of rs 36,925 crore from disinvestment in public sector undertakings. Government committed to disinvestment of air india. A few of them like nmdc, ongc, bhel, national aluminium and oil india are trading at their book value. Whats new archive department of investment and public asset. Now might be a good time for the indian government to sell because it probably can.
Disinvestment or privatisation of ongc is not happening, pradhan said. Ongc videsh to miss disinvestment bus despite modi govts. The hindustan copper disinvestment on friday proved the theory right. Ongc to hire investment banker for hpcl acquisition. It is also clear that this is a shotgun disinvestment one that has neither the approval of the managements concerned nor the parent ministries of the companies. The disinvestment proceeds are now being used for balancing and keeping fiscal deficit under control and to finance current expenses. Ongcs share sale fiasco is the latest example of this governments. Lic and a couple of banks reportedly had to rescue the hindustan copper disinvestment which attracted poor. Though there was mo major market crash, sort of same thing happened in the regime of previous govt. Pawan hans udan plans run into rough weather amid divestment. The mistake was to price the share using the latter benchmark. How americas infatuation with home ownership and easy. The ongc stock has a 52week average highlow price of rs.
Psu divestment likely to start with coal india, ongc. The events that unfolded only pointed to inherent weaknesses in the implementation capacity of. The disinvestment of 5 per cent stake in staterun ongc appears unlikely this fiscal as the liquidity situation in the market is under stress after recent mega share sales while the subsidy issue remains unresolved. In a transparent bidding process, the government is keeping some of the discovered oilfields of ongc on a public domain based on a criteria which will produce more and pay higher to the government, he said. We use cookies for a number of reasons, such as keeping ft sites reliable and secure, personalising content and ads, providing social media features and to analyse how our sites are used. Finance ministry has drawn up a list of 16 psus including ongc, oil india and coal india for disinvestment in 201617 which could fetch the exchequer rs 40,000 crore at current stock value. The fiasco of the ninth round, the first of this fiscal year, of disinvestment of shares of public sector undertakings psus is another case, after the exchange rate.
Gearing up for the budget, the government attempted to keep the fiscal deficit for the current year under control through ongc disinvestment. Despite the ongc fiasco, the government may still use offer for sale on stock exchange or auction method for divesting its stake in steel authority of india sail, bhel and nalco. Of lic and the great indian disinvestment farce the. The choppy stock market conditions and rising crude oil prices have taken their toll with the central government on thursday announcing advancement of disinvestment in oil and natural gas. Absent the sale of an asset, disinvestment also refers to capital expenditure reductions. How cheaply shares of six of the prized public sector companies were sold recently in the market is best illustrated by buffett to whom the most striking thing is how many financial assets are still too expensive for. Undervalued psus may gain from govt rethink on divestment policy. In a transparent bidding process, the government is keeping some of the. The acquisition turned the character of ongc from being a debtfree company to one with no cash and loads of debt on its books. When asked about the ongc disinvestment, petroleum minister jaipal reddy brushed it off saying it was the decision of the department of disinvestment dod. Share on twitter opens new window share on facebook opens new window share on linkedin opens new window share on whatsapp opens new window save to myft. While it funded a part of the acquisition through cash reserves, it borrowed in excess of rs 20,000 crore for the acquisition. Staterun pawan hans helicopters plans to launch flights under the regional connectivity scheme udan have run into rough weather amid the ongoing disinvestment process. Ongc cash reserves crash to rs 167 crore from rs 9,511.
Disinvestment of public sector units in india wikipedia. The government is all set to cross annual disinvestment target this fiscal for the first with ongc buying the centres entire 51 per cent stake in hpcl for rs 36,915 crore. Eyeing disinvestment target, centre looks to have ntpc buy government stake in nhpc. The investment or merchant banker to be hired will be separate from the one the government is hiring to manage its disinvestment. Finmin lines up 16 psus including ongc, oil india and coal india for disinvestment. The steep fall in oil prices improves indias manoeuvrability to address an economic recession. Read more about ongc disinvestment unlikely this fiscal on business standard. Strategic disinvestment of both hpcl, bpcl this year. Economics political science economic policy electric utilities forecasts and trends nuclear energy petroleum industry public sector.
Eyeing disinvestment target, centre looks to have ntpc buy. Sundaram warren buffett and indias disinvestment exercise have a stark interpretive connection. Government set to hit divestment goal 1st time post rs. Disinvestment in sail, bhel, nalco despite the ongc fiasco, the government may still use offer for sale on stock exchange or auction method for divesting its stake in steel authority of. However, the governments decision to increase the excise duty on fuel betrays an attempt to appropriate for itself the benefits that may have otherwise accrued to the citizens. Heres another quote from ex finance minister, yashwant sinha, a senior leader of the current ruling party, while he was in opposition in march 2012, around the time lic bailed out ongc s disinvestment auction with an unnecessarily highpriced bid. Cil, ongc disinvestment likely to be in 2 tranches the cabinet has approved 5 per cent stake sale in ongc, which could fetch an estimated rs 11,477 crore to the exchequer. Ongc disinvestment latest breaking news, pictures, videos, and special reports from the economic times. In of its most expensive buys, ongc last year paid rs 36,915 crore to purchase the governments entire 51.
Aviation minister the government is committed to the disinvestment of national carrier air india and the plan is to make it more operationally viable before disinvesting it, civil aviation minister hardeep singh puri told the rajya sabha on wednesday. Ongc took a loan of close to rs 25,000 crore to buy the governments equity in hpcl. Lic is a captive source of funds for the government. Hpcl relents, govt recognises ongc as company promoter. The 199192 budget called for up to 20% disinvestment, while by the time the 199697 budget was announced, almost 72 psus were considered for disinvestment. With lic sitting on rs 40,000 crore, ongc, coal india. Website content managed by department of investment and public asset management, mof, goi designed, developed and hosted by national informatics centre nic last updated.
Loans used to finance the purchase of the disinvested shares normaly undergo liquidation unless markets enter the bear. Disinvestment is the action of an organization or government selling or liquidating an asset or subsidiary. Ongc videsh to miss disinvestment bus despite modi govts ambitious target the modi govt has an ambitious disinvestment target of rs 1. The rs 36,915 crore ongc hpcl deal may help the government miss its fiscal deficit target of 3. Disinvestment in public sector units in india, is process of public asset sales by president of india on behalf of government of india, directly offer for sale to public or indirectly bidding process in capitalized market.
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