The Oil Ministry has approved part sale of government’s stake in Oil and Natural Gas Corp (ONGC) as well as Indian Oil Crop (IOC), a move that could fetch about Rs 24,000 crore for the Centre this fiscal.

IOC would be the first to be disinvested, an Oil Ministry official said.

Alongside the 10 per cent government stake sale, the company will do a follow-on public offer (FPO) of its 10 per cent expanded equity to raise close to Rs 9,000 crore for part-financing its capital expenditure.

The ONGC issue, in which the government would offload 5 per cent stake, would follow IOC. But before its FPO, the company may issue bonus shares and split stock, the official said.

Oil Minister Murli Deora had for more than two weeks held back his consent to the Finance Ministry’s proposal to include ONGC and IOC in the list of public sector units slated for disinvestment this fiscal.

“The Minister approved of the divestment a few days back,” the official said.

However, despite the absence of consent from Deora, a Committee of Secretaries (CoS) had on August 17 included the two companies in the list of PSUs that have been shortlisted for disinvestment this fiscal.

The CoS has directed the oil ministry to obtain approval from the Appointments Committee of Cabinet for selecting non-official directors on the Boards of ONGC and IOC so that the “disinvestment process is not hampered due to the non-appointment of independent directors.”

IOC and ONGC don’t meet the norm of market regulator SEBI that half their Boards be made up of non-official or independent directors.

The proposal is for sale of 5 per cent or 10.6 crore equity shares in ONGC through a follow-on public offer (FPO), which at today’s trading price of Rs 1,359 would fetch the government Rs 14,405 crore.

In IOC, the proposal is for the sale of 10 per cent government equity through a FPO. Simultaneously, IOC also proposes to sell 10 per cent of the expanded equity capital to raise funds for its expansion plans.

Post stake sale, the government’s shareholding in ONGC will come down to 69.14 per cent from 74.14 per cent. In IOC, the twin divestment and stake sale would reduce the government holding from 78.92 per cent to 64.57 per cent.

According to the road map being prepared, IOC would be the first to be disinvested. It will first sell 10 per cent, or 24.27 crore equity shares, which at today’s stock price of Rs 425 would fetch the company Rs 10,315 crore to help it part-finance its capital expenditure of Rs 75,000 crore.

This would be followed by sale of 10 per cent government holding, amounting to 19 crore shares, to raise Rs 8,075 crore. ONGC divestment will follow this.

IOC has written to the Oil Ministry expressing its interest in raising money from the market for its capital investment requirement, the official said.

The nation’s largest oil firm wants to take advantage of the recent government decision to free fuel prices by tapping the capital markets.

The government had in June decontrolled petrol price, which resulted in a Rs 3.50 per litre hike in rates in Delhi. Also, diesel prices were hiked by Rs 2 per litre, domestic LPG by Rs 35 per cylinder and Rs 3 a litre on kerosene.

Despite the June move, IOC currently loses Rs 1.92 a litre on diesel, Rs 158.06 per litre on LPG and Rs 15.57 a litre on kerosene.

Overall, it is estimated to lose Rs 30,023 crore in revenues this fiscal.