The state-run firm has to buy back the government shares in the company using its internal resource accruals, instead of loans from banks or financial institutions, due to the existing legal framework. Therefore, it needs time up to December to arranges internal resources. “ONGC will then have to substantially defer the interim dividend for current (fiscal) year and shift the same to the final dividend payable in the next financial year,” ONGC wrote to the finance ministry.

In August, the company had sought an exemption from the buyback, citing financial liability and poor liquidity, and said that it needs money to service the unsecured loan of Rs 25,592 crore that it had taken to partially finance the acquisition of gas assets of GSPC and HPCL. However, its request was denied by the Committee on Management of Government Investment in Central Public Sector Enterprises, which said that ONGC could raise money from the market for the buyback.

However, ONGC has cited Rule 17 of the Companies (Share Capital & Debenture) Rules and Section 4 of the SEBI (Buyback of Securities) Regulation, as per which it can not raise money from the markets for the purpose of the buyback, which can only be via internal accruals. Therefore, it has argued to defer interim dividend payout for the current financial year.

As part of the disinvestment target, ONGC will have to buy back 3% of the government’s shares, for which it needs Rs 4,826 crore. In the last financial year, the explorer had paid interim dividend twice, amounting to Rs 6,736 crore.

ONGC is one of the three oil firms identified by the government for the share buyback to meet the disinvestment target of Rs80,000 crore for the current fiscal.