ONGC stake sale fiasco to hurt 29 crore LIC policy holders

The Standing Committee of Parliament has criticised the government for the bungled auction of Oil and Natural Gas Corporation’s shares.

According to television reports, the committee said the ONGC divestment was nothing but mere"financial engineering" and that the government has attempted to “shift money from one pocket to the other”.

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The committee also criticised government-owned insurance company LIC, which bought more than 80 percent of the shares on sale of the state-run oil giant.The committee pointed out that the 29 crore policy holders of LIC would suffer as a result.

In early March, LIC bought 37.71 crore shares, representing 4.41 percent stake in ONGC through open market purchases, after the stake sale failed to attract enough buyers. LIC paid Rs 11,426 crore for those shares, valuing each share at Rs 303.

Currently ONGC shares are trading at Rs 267.9.

Firstpost had also criticised the manner of the stake sale , and raised questions whetherLIC broke any regulatory norms in its purchase of ONGC’s shares.