ONGC stake sale was an effort by the govt to bridge the gap between the fiscal deficit before the budget and now it has not taken off and analysis of same suggests the following reasons:
- Price band of Rs 290/share is at a 6% premium to its current market value.
- ONGC bears 38% subsidy burden instead of earlier 33% on behalf of oil marketing PSUs who sell petroleum products at government stipulated prices.
The auction for the sale of Government's 5% stake in ONGC today got bids for 29.22 crore shares worth about Rs 8,500 crore, but could fetch only about two-third of the targeted proceeds of over Rs 12,000 crore. The auction got bids for 19.92 crore shares on the NSE and about 9.3 crore on the BSE, exchange officials said. The total number of shares on offer were 42.7 crore shares.
Disinvestment of profit making PSUS should be only taken as a last resort and govt should be atleast realistic while pricing the stake sale. if the sale is at a higher price than prevailing market price, than one has to be out of the senses to buy in stake sale.
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