Ministry agrees to our concern over IOC’s OFS timing: Butola

If CMD of Indian Oil Coropration is to be believed then the much awaited Rs. 4000 crore IOC offer for sale offer (OFS) is all set to get delayed. In an exclusive discussion with DSIJ on the sidelines of National Energy conservation award function in New Delhi, R S Butola said: “Regarding IOC’s disinvestment we have updated ministry of petroleum and natural gas in the month of October itself about timing not appropriate for the issue. I think now ministry also shares our view.” This clearly indicates that OFS, which is expected to come in December, will now be delayed. Butola said that the final decision has to be taken by the government as it is selling its 10% stake and company doesn’t have any role to play in this. 

Regarding what would be the appropriate timing of the issue Butola said; “As markets are also concerned with the uncertainty engulfed on the impact of subsidy payout on IOC as per the report of committee headed by Kirit Parikh, it won’t be appropriate to have this OFS till some clarity comes in on this front. ” Whether the inclination to postponement of OFS came after the lukewarm response of foreign investors during recent road shows in Gulf, he said that we did organize road shows in Abudhabi  and Dubai but it wasn’t solely for OFS purpose but for some other technical factors as well, so it is not right to say that we have got a lukewarm response. Important to note that CMP of IOC stock is Rs.197 and it is almost 48% down from its 52 week high price of Rs. 375 on January 18. 

On the subsidy burden on the company he said that last year the oil subsidy burden was Rs.1.61 lakh crore and in the current fiscal we expect it to be lower at around Rs. 1.40 lakh crore. In such a situation IOC’s share of under recovery would be around 74-75 thousand crore, which will be met by cash subsidy payment by government and Upstream companies’ contribution towards oil subsidy burden. “Main problem with IOC is that there is always some delay in the payment of cash subsidy by the government and for that company has to take loan for incurring its expenses. Interest payout on this loan is a big burden on us,” quipped Butola. For the present under recovery on petroleum product He said; “though we are losing some amount at the current prices but during our recent fortnightly review meeting we decided not to go for an increase in prices as we thought we can postpone it for some more time considering international crude oil prices. 

In another major event regarding Paradeep refining facility of IOC, Butola informed that there were some problems and delays in laying pipeline for the facility due to unavailability of environmental clearances, but now government has deliberated on the matter and given clearances to the company.  “This is really positive and now we will commence the work and pipeline is expected to be completed by 2020-21,” informed Butola.