Jolt to Nalco divestment
NTPC warms up for foray into distribution
Power utilities ready to tap capital market
Official assurance on food stock
SET eyes top slot

 
 
JOLT TO NALCO DIVESTMENT 
 
 
FROM JAYANTA ROY CHOWDHURY
 
New Delhi, July 20: 
BJP’s usually mild mannered ally Naveen Patnaik, chief minister of Orissa, has for the first time in his life written a strongly-worded letter to Prime Minister Atal Bihari Vajpayee threatening “serious repercussions” if the Centre goes ahead with its plan to sell the Orissa-based aluminium major Nalco.

In the letter (a copy of which is available with The Telegraph), the Orissa chief minister has warned that “there is serious resentment in the state cutting across party lines. If the central government proceeds further with the implementation of the recent CCD decision on privatising Nalco, I apprehend that any unilateral action by the central government in this very sensitive matter, without taking us on board, would have serious repercussions.”

Sources in the Prime Minister’s Office, who have been analysing the letter and gathering political intelligence on the Orissa chief minister’s intentions, said Patnaik has carefully chosen the tone and tenor of his letter to make it clear to Vajpayee that the consequences will be an embarrassing statewide agitation similar to the one Chattisgarh chief minister Ajit Jogi had kicked off against the Balco selloff.

For Orissa, the stakes are even higher than it was for Chattisgarh as Nalco is the only major central government enterprise in the state employing some 6,400 workers.

For the Vajpayee government, if Orissa starts an agitation on a central government decision and Bengal too decides to take to the streets on the bifurcation of the Eastern Railways, things could indeed look bleak.

Patnaik’s letter handed over earlier this week through his lieutenant Arjun Charan Sethi, water resources minister in the central government, also rubbishes disinvestment minister Arun Shourie’s contention that there is a clear-cut consensus on the BJP government’s divestment strategy.

“I am deeply concerned about the decision of the Cabinet Committee on Disinvestment taken a couple of days back on privatisation of Nalco, reversing the earlier decision to carry out divestment in three stages...(there is need) to take the state government into confidence on sequencing disinvestment,” the Orissa chief minister has told the Prime Minister.

The problem really started nine days ago when the CCD decided to put the Orissa-based aluminium major up for sale to strategic bidders as well as go in for simultaneous public and ADR issues, despite strident opposition from BJP’s Orissa ally, the BJD.

Disinvestment minister Arun Shourie had said that the government would sell 29.15 per cent to a strategic partner, another 30 per cent through a public offering and ten per cent through an American Depository Receipt simultaneously. In all, the government would sell 59.15 per cent of its current holding of about 87.5 per cent stake in the aluminium major.

The problem for Shourie and his boss Vajpayee is that earlier, the same BJP government had agreed with Patnaik that the government could divest in Nalco through sales to the public and through ADR or GDR issues, while retaining management control for some more time at least.

   

 
 
NTPC WARMS UP FOR FORAY INTO DISTRIBUTION 
 
 
BY SUTANUKA GHOSAL
 
Calcutta, July 20: 
The National Thermal Power Corporation (NTPC) has decided to invite bids both in the domestic and international markets for a joint venture partner for its proposed entry into the distribution business.

Senior NTPC officials said: “The company is now serious on entering the distribution business. We will be appointing a consultant soon to work out a strategy for entering into the business.”

Earlier, NTPC had decided to team up with BSES for entering into the distribution business. But the talks failed and the joint venture failed to materialise.

The officials said NTPC has again decided to enter the distribution business since the company feels that its cash flows are likely to improve with the direct access to consumers that will follow.

The consultant is being appointed to see how the distribution business can be made profitable. “Our previous experience in distribution was not very promising. In the case of Orissa, the distribution zones are reeling under a cash flow squeeze owing to the unviability of the intermediary between the distributor and the generator—Gridco the transmission company.

“The proposed joint venture pins its hopes on the success of reforms in the state power sector leading to privatisation of distribution zones,” the officials said.

NTPC has identified 10 circles where it will commence distribution. These circles are located at Madhya Pradesh, Chhatisgarh, Karnataka and Rajasthan.

The toughest roadblock before power sector development has been the poor financial health of the state electricity boards, which, in turn, is mainly due to poor performance on the distribution front. Out of the total energy generated, only 55 per cent is billed and only 41 per cent is realised.

The gap between average revenue realisation and average cost of supply has been constantly increasing.

During the year 2000-01, the average cost of supply was Rs 3.04 per unit and average revenue per unit was Rs 2.12 —leaving a gap of almost 92 paise.

All these have eroded the volume of internal resource generation by SEBs. The annual losses of SEBs have reached a level of about Rs 26,000 crore.

   

 
 
POWER UTILITIES READY TO TAP CAPITAL MARKET 
 
 
FROM M. RAJENDRAN
 
New Delhi, July 20: 
Power utilities are drawing up plans to raise funds from the capital market after getting an in-principle clearance from the finance ministry.

The National Thermal Power Corporation and National Hydroelectric Power Corporation are expected to tap about Rs 2,500 crore each from the market over the next few years. The Power Finance Corporation and PowerGrid Corporation of India are also likely to generate about Rs 1,000-2,000 crore from the capital markets.

“The aim is to allow power utilities generate resources for various projects which need major investment. Even when privatisation of the sector was initiated, it was clear that neither budgetary support nor internal resources would be able to provide the necessary funds,” power ministry sources said.

“But different circumstances over the last few years did not allow foreign direct investment in the sector and the global financial environment was not suitable to tap funds from the market,” sources added.

Power PSUs are likely to submit proposals next month, which will then be vetted by the finance ministry.

According to a finance director in one of the public sector power utilities, “As far as availability of funds is concerned, debt raised from the capital markets ultimately flows from household savings in the domestic economy. According to a Planning Commission study, these savings in financial assets amount to about Rs 1,80,000 crore to Rs 2,30,000 crore during the last four financial years.”

A Planning Commission report states, “The reason for lack of capital issues by the power sector attributes mainly to its control which vests with the government and the entities were not allowed to raise equity and also the problems associated with the power sector due to poor financial status. Further, the mobilisation of funds through a public issue is costlier in comparison to mobilisation through private placements.”

It also points out that in the past six years, hardly any funds have been mobilised through the public issue of equity shares.

   

 
 
OFFICIAL ASSURANCE ON FOOD STOCK 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, July 20: 
The country has adequate food stocks and there will be no problems if the monsoon is delayed and the kharif crop is affected, says R.D. Kapoor, secretary in the department of food and public distribution.

The food stocks are adequate to supply the public distribution system (PDS), he added.

Food and civil supplies secretaries of 11 states gathered here today to assess requirements in view of the delay in the onset of the monsoon.

The meeting was attended by secretaries from Andhra Pradesh, Arunachal Pradesh, Chhatisgarh, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh.

   

 
 
SET EYES TOP SLOT 
 
 
BY ALOKANANDA GHOSH
 
Calcutta, July 20: 
SET India has set its sights on the top slot in the channel ratings, a target which it expects to achieve by the end of the current financial year.

“Currently, we have 17 to 20 per cent of the market share, which is expected to almost double to 30 to 35 per cent by March 2003,” says Kunal Dasgupta, chief executive officer, SET India. “The channel will see a 100 per cent growth during this year, which will take us to the top position.”

The entertainment channel has already beefed up its distributor network and dedicated 30 per cent of its personnel towards marketing and promotional activities.

Says Shantonu Aditya, senior vice-president for franchisee channels and distribution, “We have adopted a distribution strategy to help us reach out to the entire cable subscriber base. Currently, we reach out to 26 million homes. By the end of the financial year, we expect to touch 38 million homes.”

For the first quarter ended June 30, 2002, the channel has seen a growth of 20 per cent over the first quarter last year, while subscription has seen a growth of around 200 per cent.

   
 

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