Govt wants ONGC to list OVL on bourses to unlock value

23 Aug 2018


The government has asked listed state-run oil explorer ONGC Ltd to list its overseas investment arm, ONGC Videsh Ltd also on stock exchanges and transfer proceeds to the government as a special dividend.

The Department of Investment and Public Asset Management (DIPAM) has written to ONGC management last week asking the state-run explorer to get ONGC Videsh also listed on the bourses in order to both unlock value and improve its corporate governance, helping also the government meet its divestment target.
Divestment of a 51.11 per cent stake in state-owned refiner Hindustan Petroleum Corp Ltd (HPCL) to ONGC had helped the government add Rs36,915 crore to its kitty and meet its divestment target last fiscal. 
ONGC and state-run insurance major LIC are the two cash cows for the government and the two are milked to the extreme to meet government’s fiscal targets. 
Having failed to find a buyer for loss-hit Air India, the divestment department is looking at alternatives to meet the Rs80,000 crore revenue mobilisation target projected in the budget for 2018-19.
The government has so far this fiscal realised Rs9,219.91 crore through divestment against the targeted Rs80,000 crore.
OVL, which is 100 percent owned by ONGC, has so far invested Rs1,50,000 crore ($28.36 billion) in 41 projects it has across 20 countries.
DIPAM wants PSUs with a positive networth and no accumulated losses to be listed on the bourses to unlock value.
While the DIPAM did not state the extent of divestment in OVL, Sebi r3egulations require a company to sell at least 25 per cent of its equity to the public to remain listed.
The government owns 67.45 per cent in ONGC and if OVL to be listed the government would get a proportionate share of the proceeds.
OVL portfolio includes 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.
OVL reported a net profit of Rs981 crore on a turnover of Rs10,418 crore in 2017-18 fiscal. This compared with a net profit of Rs701 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.

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