Though it is "too premature" to say what extent of government holding will be offloaded, the present thinking is that it would not exceed 5-7 per cent for the two PSUs. In the case of IOC, the company may later go in for a public issue early next year where 10 per cent of its equity will be offered. Effectively, this would bring down the centre's holding in IOC to 76 per cent from 91 per cent. The centre holds 96 per cent in Gail. Its GDR issue was put onhold last year owing to poor market conditions but sources say that this time around, there may not be an encore given the new thrust on the local market.

They also believe that the fact that two oil scrips would be hitting the market in near succession would not affect their showing.

IOC's disinvestment has just not been able to get off the mark owing to a host of factors. The most significant being the oil pool account crisis which saw outstandings to IOC pile up to Rs 10,000 crore. Apart from this, the Fortune 500 company had to seek deferred credit for six months on crude purchases from the Oil and Natural Gas Corporation.

The impression among merchant bankers handling the issue was that this was not the best of times for the country's leading refining company to approach the market. According to them, unless a price hike was effected, there was no way the corporation's GDR issue would sail through comfortably. IOC had to, consequently, put on hold its 10 per cent public offering, due in early 1997,which would have fetched Rs 2,000 crore. The disinvestment schedule for IOC and other PSUs went awry not only owing to investor sentiment but also the change of guard at the centre which was preceded by the usual bout of political uncertainty. It is imperative, sources say, that this is not repeated since both IOC and Gail have earmarked investments in new projects and expansions totalling over Rs 3,000 crore for the current financial.

The two, in fact, will join hands for a Rs 1,250-crore LPG pipeline project proposed to be constructed from Kandla in Gujarat to Loni in Uttar Pradesh. While Gail will handle installation costs, IOC's contribution will be towards storage and handling and in creating facilities at the ex-tap points in Rajasthan, Haryana and Delhi. The only area of concern, observers say, is that the actual disinvestment proceeds during the last five years have fallen woefully short of target. It may not be very different during 1998-99 also, but with the oil sector opening up and the PSUsoperating in a deregulated scenario, the centre has few options but to go ahead.