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Selloff alternatives on menu

New Delhi, Dec. 3: The government may consider alternatives such as buyback and the payment of special dividend by Bhel and Coal India to meet the budgeted divestment target of Rs 40,000 crore during the current fiscal.

“The administrative ministries of Bhel and Coal India have been asked to come back with various options. These options are buyback, dividend payments and divestment,” finance minister P. Chidambaram said after a high-level meeting convened by Prime Minister Manmohan Singh on divestment.

“The ministry of heavy industries and the coal ministry (have been asked) to work out best options for raising proceeds as an alternative to divestment. The money has to be raised through these options,” he said.

The Centre has budgeted Rs 40,000 crore from minority stake sale in PSUs in the current fiscal. With eight months of the fiscal over, it has managed to garner only over Rs 1,325 crore through stake sale in six PSUs.

After the meeting, coal minister Sriprakash Jaiswal said, “Discussions are underway (divestment of Coal India) and no decision was taken.”

The stake sale of Coal India (CIL) has been hanging fire for long because of opposition from the trade unions.

Unfavourable market conditions have hampered Bhel’s divestment as the company’s share price has taken a beating since its divestment was approved in 2011.

The government had originally planned to divest 10 per cent in CIL, but because of stiff opposition from unions, it lowered it to 5 per cent or 31.58 crore shares. At the current market price of Rs 274.30 apiece, the CIL stake sale could fetch over Rs 8,600 crore. The government holds a 90 per cent stake in CIL.

By selling 5 per cent or 8.28 crore Bhel shares at the current market price of Rs 158.40, the exchequer could reap in over Rs 1,300 crore.

Officials said state-owned companies sitting on huge cash piles without any immediate capital expenditure plans were likely to be directed to pay a special dividend.

 
 
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