Govt approves $2.5 bn ONGC share auction, price may be set at Rs 290 a share (ET)

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India on Tuesday approved selling a 5 percent equity stake in state-run Oil and Natural Gas Corp through a share auction, Oil Minister S Jaipal Reddy said, reviving the government's faltering divestment programme. The share sale could raise as much as 121 billion rupees ($2.5 billion) at ONGC's closing price of 283.40 rupees a share on Tuesday. The shares closed 0.8 percent higher in a firm Mumbai market ahead of the announcement. "The decision is to go in for sale of shares. Now the notice needs to be given to the stock exchange," Reddy told reporters after a meeting of a panel of ministers. "The details can be divulged only after the notice is sent to the stock exchange." He said the panel had decided on a floor price but did not elaborate. The auction will be held in a couple of days, he said. The government had earlier planned to sell ONGC shares through a public offering but that plan was scrapped last October after tepid response from investors amid weak equity markets. India's stock market posted its first annual fall in three years in 2011, losing nearly 25 percent. Shares in ONGC, the second-largest listed firm in India by market value, fell 20 percent in the same period. New Delhi is widely expected to miss by a long chalk its deficit target of 4.6 percent of GDP for the current fiscal year ending March, partly due to its inability to meet the budget target for more than $8.1 billion in state company share sales. So far this fiscal year, the government has only raised about $250 million. The government will miss its share sale target for this fiscal year, Divestment Secretary Haleem Khan said earlier this month. Indian companies raised less than $10 billion through share sales last year, down from about $23 billion in 2010, according to Thomson Reuters data. The Indian markets regulator last month allowed shareholders of the country's top 100 companies by market value to raise funds by auctioning their stakes through stock exchanges, helping avoid the time-consuming public offer route.