The Union Budget 2012 raised the cess on domestic crude oil from Rs 2,500 per metric tonne to Rs 4,500 per metric tonne, which saw the ONGC share price react, thus eroding LIC's portfolio value of ONGC.
LIC recently bailed out the ONGC auction by buying 37.71 crore shares at a total of Rs 11,069.60 crore. Thus, it paid roughly Rs 293 per share. If we now consider the current market price of Rs 270, LIC has lost Rs 23 per share. This translates into a whopping lost of Rs 867 crores on the auction shares which took place earlier this month.
The government may have been in a hurry to do the ONGC auction as they may have known that after levying a cess on crude oil, the ONGC share price would fall and hence fetch them a lower value in the auction.
The government timing for the ONGC auction was hence perfect in doing it a few days before the Union Budget 2012.