ONGC had in January received government approval to sell its 13.77 per cent stake in Indian Oil Corp (IOC) and 4.86 per cent state in gas utility GAIL India Ltd to help fund the Rs 36,915 crore acquisition of HPCL.

“IOC shares were trading at around Rs 195 in January and it is now at Rs 159 (Friday’s closing). It doesn’t make sense to sell the shares at such a big loss,” a person with direct knowledge of the matter said.

At Friday’s closing price of Rs 159.60, ONGC’s shareholding in IOC would get it Rs 21,343 crore as against Rs 26,200 crore worth in January. At Friday’s closing price of Rs 387.25, ONGC’s shareholding in GAIL is worth Rs 4,244 crore.

“We are generating enough resources internally thanks to a rebound in oil prices. We used these to bring down the borrowing for HPCL acquisition to Rs 20,000-21,000 crore in the first quarter and are repaying another Rs 3,000-4,000 crore in current quarter. Effectively, we have repaid Rs 7,800 crore,” he said. ONGC had borrowed Rs 24,881 crores on a short-term loan to fund buying the government’s 51.11 per cent stake in HPCL. The remaining came from its cash reserves.

The person said the pace of repayment may slow down in the third and fourth quarters owing to outgo on taxes and dividend as also the fact that capital spending would peak by then.

Initially, ONGC considered selling IOC and GAIL stake to fund the acquisition but it has never found the right price to offload the shares, he said.

Sources said ONGC had held talks with Life Insurance Corp of India (LIC) for selling IOC and GAIL shares but the state-owned insurer insisted on buying them at 10 per cent discount to the prevailing price.