New Delhi: The government may end the cross-holding structure existing in the oil sector as it looks to further consolidate operations of public sector enterprises and go ahead with its privatisation plan by getting a fair valuation of assets.
Official sources said that that all oil sector PSUs would be asked to exit from their investments made in equity shares of other state-owned entities. This could be done in phases, depending on the market conditions, so that the shares get maximum valuation.
The cross-holding structure among oil PSUs was built in the late 1990s as the government sold its shares in Oil India Ltd (OIL), Oil and Natural Gas Corporation (ONGC), Gas Authority of India Ltd (GAIL) and Indian Oil Corporation (IOC) in a bid to raise funds.
Consequently, while GAIL and IOC hold 7.84 and 2.45 per cent stake, respectively, in ONGC, ONGC and OIL hold 14.20 and 5.16 per cent stake, respectively, in IOC. Also, IOC and ONGC hold 2.44 and 4.87 per cent stake, respectively, in GAIL India, and BPCL (2.42 per cent), HPCL (2.47 per cent) and IOC (4.93 per cent) together own equity partial equity in OIL.
Estimates suggest that if the government divests its stake by taking the entire proceeds from sale of shares cross-held by oil PSUs, it could mobilise upwards of Rs 40,000-Rs 50,000 crore. However, it is likely that companies may plough back the money raised through equity sale to the government by declaring a special dividend. (IANS)