New Delhi, Jan. 18: The Centre wants Nalco to buy back at least 10 per cent of its own shares from the government.

The Nalco management is willing to agree to the proposal, which can fetch the government around Rs 1,200 crore.

However, officials said a proposal to buy back 25 per cent shares was being resisted by both the company and the mines ministry because it will drain reserves at a time the aluminium market is reeling under the impact of dumping by Chinese firms.

Nalco has reserves of about Rs 11,500 crore, with cash reserves alone accounting for Rs 4,600 crore. The buyback is a tempting option for the disinvestment ministry, which is way behind its selloff target of Rs 69,5000 crore for 2015-16.

Earlier, the government had sought to offload 10 per cent of its 80.93 per cent stake in Nalco through a follow-on public offer. However, the move was opposed by both the labour unions and Odisha chief minister Biju Patnaik, who feared this was a prelude to the privatisation of the aluminium maker in a manner similar to the sale of Balco to Vedanta during the previous NDA regime.

Meanwhile, the share price of Nalco has fallen to Rs 34.50 on the Bombay Stock Exchange from Rs 50.90 in May 12, derailing plans for a share issue.