(FE)
The government has exempted state-owned explorer ONGC from the twin obligations of buying back its own shares and issuing bonus shares in the current fiscal, a move that would help the upstream hydrocarbon to not cut back on its capex plan of Rs 32,000 crore for the year. Under the guidelines issued by the department of investment and public asset management (DIPAM) in May 2016, PSUs above certain defined thresholds have to buy back a portion of their shares; also, say the guidelines, state-owned firms with a certain level of ‘reserves and surplus’ must issue bonus shares. ONGC meets both criteria but a depleted cash surplus has turned it cautious.
According to official sources, the government has chosen to give ONGC a reprieve for this year from both the commitments, considering that it also had to shoulder the yoke of boosting the government’s ‘disinvestment receipts last fiscal by purchasing its 51% stake in oil retailer HPCL for Rs 37,000 crore. A zero-debt company till FY17, ONGC borrowed about Rs 25,000 crore in March 2018 to fund its acquisition of HPCL while it also dipped into its reserves and surplus for about Rs12,000 crore. After the transaction, ONGC’s surplus cash has depleted to a little over Rs 1,000 crore at FY18-end from over Rs 9,500 crore at FY17-end. The special buyback/bonus share waiver for ONGC comes at a time the explorer is also staring at the possibility of being asked by a fiscally wary government to again share the oil subsidy burden if crude prices surge beyond a certain level.
