New Delhi, Oct 20 (IANS): The government is likely to sell 5 percent stake in state-run explorer Oil and Natural Gas Corp (ONGC) next month, finance ministry sources said following a meeting of the disinvestment secretary with merchant bankers Monday.

The union cabinet cleared the stake sale last month.

In view of the new gas rate announced Saturday, which at $6.1 per unit (current $4.2) effective Nov 1 will directly benefit oil exploration companies, it is the right time to divest, a finance ministry source told IANS.

"Keeping valuations in mind, this is the right time to divest in ONGC," the source said.

The disinvestment department has selected Citigroup, HSBC Securities, UBS Securities, ICICI Securities and Kotak Mahindra Capital for managing the divestment, he added.

Earlier Monday, Petroleum Minister Dharmendra Pradhan confirmed to a news channel here about the ONGC stake sale.

The government last sold 5 percent stake in ONGC in 2012 for Rs.14,000 crore.

Currently it holds 68.94 percent share in the state-run company.