New Delhi, Feb. 12: The cabinet today approved the sale of the government’s residual 49 per cent stake in Balco through auctions, which may fetch about Rs 4,000-6,000 crore.
The finance ministry has already initiated the process of valuation of the company as advised by Prime Minister Manmohan Singh.
Balco’s valuation has been a bone of contention between the mining company and the government.
In 2001, the then NDA government had sold a 51 per cent stake in Balco to Sterlite for around Rs 551 crore. The deal was criticised by the Congress and the Left for being undervalued.
After the Congress-led UPA came to power, the government and Sterlite locked horns over the latter’s move to exercise the call option to buy out the remaining stake.
Attorney-general Milon Banerjee had ruled that the put and call options in buyouts were not valid in India.
In January 2012, Vedanta, which holds the shares bought by Sterlite, had offered Rs 17,275 crore to buy out the government’s remaining stakes in Hindustan Zinc and Balco, reigniting the Centre’s interest in rump stake sales.
The government has budgeted Rs 54,000 crore from stake sales in PSUs — Rs 40,000 crore from state-run companies and Rs 14,000 crore from residual stakes.
Officials said the government might be able to improve upon its residual sales target by about 50 per cent if these two sales go through.
Sugar export subsidy
The cabinet has agreed to offer a subsidy of Rs 3,333 a tonne for the export of raw sugar in February and March. This will help to move out surplus sugar while stabilising domestic prices, which hit a five-year low in recent weeks.
The move will help sugar mills traditionally linked to Congress allies as well as cane farmers who form a significant chunk of the voter base for Sharad Pawar’s Nationalist Congress Party and Ajit Singh’s Rashtriya Lok Dal party.
This decision was deferred thrice this month over differences between the agriculture and food ministries on the amount of subsidy.
Amethi paper mill
The cabinet today cleared the setting up of Jagdishpur Paper Mills Ltd, a pulp and paper project at Jagdishpur in Amethi, Uttar Pradesh, for Rs 3,650 crore.
The project in Congress leader Rahul Gandhi’s constituency will be implemented in two phases.