Buoyed by the success of the initial public offers (IPOs) of NHPC and Adani

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Power, the government-owned oil explorer, Oil India Ltd (OIL), has fixed a price band of Rs 950-1,050 per share in its offer of 26.4 million shares.

At the floor price, the IPO is likely to mop up Rs 4,507 crore and at the upper limit Rs 4,982 crore.

The price band was fixed on Monday by a group of ministers headed by finance minister Pranab Mukherjee.

The issue will open on September 7 and close on September 11. OIL will be listed on the bourses on September 29.

The company will offer fresh equity of 11 per cent, while the government will put on offer 10 per cent of its own stake in the company to state-owned refiners.

At the bottom of the price band, the company will get Rs 2,512 crore; and at the top end Rs 2,777 crore. The figures for the government’s kitty will be Rs 1,995 crore and Rs 2,205 crore.

“We have investment plans of Rs 4,500 crore over the next two years. If need be, the company would fund capacity expansion plans through internal accruals,” T Ananth Kumar OIL finance director, OIL told Financial Chronicle.

The company requires Rs 2,300 crore in 2009-10 and Rs 2,400 crore in 2010-11 for funding greenfield and expansion projects. It now produces 3.5 million tonnes of oil every year. Post-issue, the government’s stake will go down to 78.5 per cent from 98.13 per cent.

The government stake dilution will come through share sale of 5 per cent to Indian Oil Corporation, and 2.5 per cent each to Hindustan Petroleum and Bharat Petroleum. The public holding will be about 12 per cent.