Modi Govt Likely To Give Up Direct Control Of Indian Oil, GAIL, ONGC, NTPC; Here's Why

New Delhi: Grappling the shortfall in budget deficit and reviving investments to spur economic growth in the country, Modi government is likely to give up its controlling stakes in most of its profitable state-run energy companies including Oil & Natural Gas Corp. (ONGC), Indian Oil Corp., NTPC Ltd. and GAIL India Ltd. According to a Bloomberg report, the Central government is planning to cut down its direct holding in the aforementioned energy behemoths to below 51 per cent. The report also informed that government's indirect holding, through arms such as Life Insurance Corporation of India will stay above 51 per cent. In March 2019, the government had pressed cash-rich PSUs IOC and ONGC to pay a second interim dividend for the current fiscal after seeking regulatory nods. Even Finance Minister Nirmala Sitharaman had last week announced a record $15 billion asset sales target for the current fiscal, while proposing to increase the taxes on profiteering companies. Sitharaman also wanted to extract higher dividend from Reserve Bank of India (RBI) and increase duties on gold and gasoline to boost revenue and lower the budget gap to 3.3 per cent of gross domestic product. The proposal to lower direct holdings in some state-run companies below 51% was also part of Sitharaman’s budget proposals, which she said would be considered on case-to-case basis, the Bloomberg report added. While IOC has called a board meeting on March 19 to consider paying a second interim dividend, ONGC has declined saying it does not have surplus cash to make such payments within a month of an interim dividend payout. Even in 2017, the then Finance Minister Arun Jaitley wanted to create an integrated public sector oil major to match the might of the international oil and gas giants by combining some or all of its stakes in listed domestic oil and gas firms. In a regulatory filing, IOC had said: "A board meeting of the company is scheduled on Tuesday, March 19, 2019...to consider declaration of 2nd interim dividend for the financial year 2018-19." IOC had in December declared Rs 6.75 per share interim dividend alongside a Rs 4,435 crore share buyback to help the government meet its revenue targets. ONGC had announced an interim dividend of Rs 5.25 per equity share on February 14. It too had approved a Rs 4,022 crore share buyback.