New Delhi, Oct. 19: The government today approved public issues of two state-run power utilities — NTPC Ltd and Satluj Jal Vidyut Nigam Ltd — as part of a policy to unlock value and make the public part owners of national assets. The stake sale will marginally dilute the government’s holding in the two firms.

The cabinet committee on economic affairs (CCEA) today gave its approval to a 5 per cent selloff in the government’s stake in NTPC and 10 per cent in Satluj Jal Vidyut Nigam (SJVNL).

“The CCEA has given its approval to a divestment of 10 per cent in SJVNL out of the government’s share of 75 per cent and 5 per cent of the Centre’s 89.5 stake in NTPC,” commerce minister Anand Sharma said after a meeting of the CCEA.

Two other PSUs — NHPC and Oil India — had hit the capital markets recently with their initial public offerings. NHPC offered 10 per cent of its equity, while the government offloaded a 5 per cent stake. An 11 per cent fresh equity was sold in the Oil India IPO, while the government divested 10 per cent of its stake.

After the 5 per cent stake dilution, the government’s holding in NTPC will come down to 84.5 per cent from 89.5 per cent. “To make it inclusive and participatory, part of the shares will be offered to the employees of the state-run firms,” said Sharma.

Given the current market conditions, the company will be able to mop up Rs 8,500 crore through the sale. NTPC’s market capitalisation stands at Rs 1,77,350 crore.

The route for the sale will be decided later. It could be a follow-on public offer or a qualified institutional placement.

NTPC has an installed generation capacity of over 30,000MW and wants to raise this to 50,000MW by 2017.

Satluj Jal Vidyut Nigam is a joint venture between the Centre and the Himachal Pradesh government. The Centre holds a 75 per cent stake, while the rest is owned by the state government.

“After the divestment, the government’s shareholding in the company will come down to 65 per cent and the Himachal Pradesh government’s stake will remain at 25 per cent,” said Sharma. The paid-up equity capital of SJVNL is Rs 4,108.81 crore.

Satluj Jal Vidyut Nigam has announced an investment of over Rs 23,000 crore over the next 10 years to add 4,000MW to its existing capacity of 1,500MW.

Earlier this month, Prime Minister Manmohan Singh had said more PSUs should be listed on the stock markets despite disagreements within his cabinet.

“Our government is encouraging the listing of public sector enterprises on the stock markets as this will unlock the true value of a company, improve its corporate governance standards and help it in raising resources for funding future expansion plans,” Singh had said.

Work has already started on chalking out the public issue plans of two more companies — Engineers India and Rural Electrification Corporation Ltd (REC).

The board of directors of REC had approved the proposal of a follow-on public offer at its meeting held on October 16.

REC had raised over Rs 1,600 crore through its IPO of 15.61 crore shares in February last year. The issue constituted about 18 per cent of the fully diluted post-issue capital of the PSU.

Unitech stake sale

The government today gave a green signal to Unitech Wireless to sell up to 74 per cent stake to Norwegian telecom firm Telenor.

Delhi-based realty firm Unitech had earlier offloaded a 67.25 per cent stake in its telecom venture to Telenor for Rs 6,120 crore. The four-tranche deal is set to be completed by the year end.

The government’s approval is required if the shareholding of foreign entities in a telecom firm exceeds 49 per cent. In August, Telenor had obtained the approval of the Foreign Investment Promotion Board to hike its stake in Unitech Wireless to 74 per cent. The next stage is to get the cabinet’s clearance for full equity investment.

In May 2009, Telenor had closed the second stage of the deal with Unitech Wireless by paying Rs 1,130 crore for an additional 15.5 per cent stake in the company. This, along with the 33.5 per cent stake that the Norwegian firm had acquired in March for Rs 1,250 crore, took its total equity stake in Unitech Wireless to 49 per cent.

Telenor, has operations in 13 countries — including Bangaldesh, Pakistan, Malaysia and Thailand — with over 170 million users.