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New Delhi, June 28: The Congress-led government’s first divestment initiative has taken off.
It has issued a note to the core group of secretaries to divest 10 per cent each in National Hydroelectric Power Corporation Ltd (NHPC) and Oil India Ltd.
| FUND APPETITE |
Divestment targets:
● NHPC & Oil India
Stake call:
● Both companies to dilute
10% stake through IPOs
● Govt to divest 5% in NHPC and 5%-10% in Oil India
Cash count:
● Govt to mop up Rs 3,000cr from stake sales in two firms
● Aim is to fetch around
Rs 10,000cr from selling small stakes in PSUs |
This is the first time in almost three years that the core group for divestment, headed by cabinet secretary K.M. Chandrasekhar, will handle stake dilutions in public sector companies.
Divestments were stalled in July 2006 after the DMK opposed the sale of a small stake in Tamil Nadu’s Neyveli Lignite Corporation.
The move comes a few days ahead of the Union budget, in which divestment may feature as a source of funds for the cash-strapped government.
Officials said the core group would meet in the next fortnight and clear the divestment proposals.
The two companies could come up with their open offers as early as September.
The government plans to allow NHPC to dilute a 10 per cent stake through an initial public offering, while itself selling a 5 per cent stake. Around 168 crore shares will be put up for sale at a face value of Rs 10 each.
Officials said the stake sale in the power utility could garner around Rs 3,000 crore, two-thirds of which would go to the company.
NHPC has secured approval — valid till September — from the Securities and Exchange Board of India for a public float.
It reported a net profit of Rs 1,075 crore on a turnover of about Rs 2,700 crore, or a profitability of around 40 per cent, in 2008-09.
The PSU has been consistently reporting profits, and the money from the public issue will be used to set up new plants.
Oil India will come out with an IPO to sell a 10 per cent stake in the open market, with the government offering 5-10 per cent more.
The government’s holding in the company can come down to around 78.5 per cent from 98.3 per cent.
Officials said the government’s piggyback sales in the two companies could fetch it up to Rs 3,000 crore.
They said the aim was to mop up around Rs 10,000 crore from selling small stakes in the current financial year.
Other PSUs where the government may consider limited stake sales include Hindustan Fertiliser Corporation, Fertiliser Corporation of India, BSNL, Bhel and Coal India.
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