New Delhi/Mumbai: The board of ONGC has approved exiting helicopter service provider Pawan Hans by selling its entire 49 per cent stake as it looks to cut debt and consolidate resources in core oil and gas business, officials with direct knowledge of the development said.
Oil and Natural Gas Corp (ONGC) wants its interest to be clubbed with the 51 per cent government stake that is already on offer for sale, they said.
The Department of Disinvestment and Public Asset Management (DIPAM), which floated the offer for sale for government's 51 per cent stake in Pawan Hans twice in the last 10 months, is likely to issue an amended expression of interest (EoI) shortly.
Officials said ONGC of the view that its investment in Pawan Hans is no longer strategic as it charter hires helicopters to ferry staff to its oil and gas locations, mostly in offshore, through competitive bidding.
Of the 22 helicopters it currently has on hire, just seven or less than a third are from Pawan Hans. Pawan Hans owns a fleet of 46 helicopters.
"The board of directors of ONGC, at the 308th meeting held on June 29, accorded its in-principle approval for exploring options for the restructuring of ONGC group companies including exiting some with a view to consolidating business," an official said.
"The idea being to focus resources on core oil and gas exploration and production business and not scatter bandwidth of management in unrelated businesses," the official added.
Officials said when the government had first floated an offer to sell its 51 per cent stake in October last year, ONGC made an offer to DIPAM that its 49 per cent stake be also sold on same terms. At that time, the company was told to get its board approval.
Meanwhile, the government in early April withdrew its offer for sale as only two bidders including Indian helicopter major Global Vectra Helicorp and US-based Continental Helicopters made an offer. A revised offer for sale was floated later that month, which fetched about half a dozen bidders.
ONGC, they said, has written to the government that its stake can be sold on the same terms, but DIPAM was of the view that a revised offer for sale would have to be floated as some bidders may have been deterred by 51 per cent stake and would now prefer to bid when 100 per cent is being offered.
Sources said the re-floating the offer for sale is likely to delay further the government's plans to offload its entire 51 per cent holding in the profit-making JV.
"ONGC has written to the civil aviation ministry that it does not want to continue in the joint venture and would want to sell its entire holding in it along with the government," a Pawan Hans source said.
Pawan Hans operates seven Dauphin N3 Helicopters for ONGC's offshore operations. These helicopters, based at Juhu airport, Mumbai and Rajahmundry, undertake passenger crew change service and production trips on a regular basis to meet the offshore requirements of the state-owned oil and gas producer.
"ONGC wanted to exit the JV along with the government, but it was told to first get its board approval, which is now in place. The government will now modify the EoI and include ONGC stake sale also along with its own," an ONGC official said.
The government came out with a fresh information memorandum for the strategic sale of Pawan Hans on April 13 wherein bidders need to have a minimum net worth of Rs 500 crore.
The memorandum was issued days after the government withdrew the previous note apparently due to a tepid response from investors.
The last date for submission of EoIs for Pawan Hans was June 18. On June 20, civil aviation secretary R N Choubey had told reporters that "bids have been received for Pawan Hans stake sale."