ONGC stake sale stuck again; government proposes divestment in Cochin Shipyard, Ennore Port

The government has decided to defer sale of an additional 5 per cent stake in Oil and Natural Gas Corporation (ONGC) to the second half of 2011, as it failed to meet the Securities and Exchange Board of India (SEBI) rules governing the number of independent directors on the company's board.

The government, meanwhile, proposed to sell part stakes in Cochin Shipyard and Ennore Ports Ltd, although it said no final decision has been taken about time frame and quantum of disinvestment. Minister of shipping G K Vasan gave the information in the Rajya Sabha today.

The government had proposed to sell 5 per cent or 427.77 million equity shares of ONGC through a follow-on public offer (FPO) to raise up to Rs12,000 crore in the beginning of the next financial year (2011-12).

"The share sale was to open on 5 April, but has now been deferred. It is now likely in the second quarter of 2011-12," official sources said today.

Navratna PSU ONGC does not yet meet market regulator SEBI's listing norm of having an equal number of functional and independent directors and the government had planned to withdraw both its nominee directors on the board to push the FPO through.

Such a move would, however, jeopardise ONGC's position as a Navaratna PSU that gave the company's board autonomy to approve investments of all sizes and up to Rs1,000 crore investment in joint ventures.

ONGC, which earlier had 9 directors, including six functional directors, the chairman and two government nominees, has only four independent directors now and needs five more to meet the SEBI's listing norm.

Post-FPO, the government's stake in ONGC would come down to 69.14 per cent from the current 74.14 per cent.