The government has approved a share split in oil and gas major ONGC and issue of bonus shares as a prelude to the company’s follow-on public offer in March 2011.

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved splitting a share of ONGC with a face value of Rs 10 into two shares of Rs 5 each, a top official confirmed on Thursday.

Besides, it is believed to have approved a 1:1 bonus issue (1 share for every share held). However, no official comments could be obtained.

State-owned Oil and Natural Gas Corporation (ONGC) had suggested to the government that the company’s stock be split ahead of the FPO — through which the government plans to sell 5 per cent of its shares and expects to mop up Rs 10,800 crore.

Post offer, the government shareholding in ONGC would come down to 69.14 per cent from current 74.14 per cent.

Shares of ONGC closed up by Rs 40.30, or 3.23 per cent, at Rs 1,288.50 a piece on BSE on Thursday.

ONGC had appointed two international auditors–DeGolyer and MacNaughton and Gaffney, Cline and Associates– to certify its oil and gas reserves.

ONGC, which usually gets its reserves audited every five years, is getting a certification in the third year because of the planned FPO.