Centre’s Big-bang Divestment Drive to Take Off in Sept
Published: 18th July 2014 06:00 AM | Last Updated: 18th July 2014 01:11 AM | A+A A-
NEW DELHI: The Government’s big-bang disinvestment programme to shore up enough revenues is likely to get under way with a 5 per cent stake-sale in steel giant SAIL in September. This will be followed by stake sales of ONGC and other public sector undertakings like Rural Electrification Corporation (REC), Power Finance Corporation (PFC) and hydro-power giant NHPC.
To draw up global investors for the stake sale in these PSEs the Department of Disinvestment (DoD) plans to organize road-shows for SAIL later this month in countries including the US, UK, Hong Kong, Singapore and certain parts of Europe.
The Budget 2014-15 proposes to garner Rs 43,425 crore from PSU disinvestment, of which about 30 per cent is expected to come in from 5 per cent or Rs 18,000 crore stake sale in ONGC.
Besides a 10 per cent stake sale in Coal India is also on the table which could fetch about Rs 23,000 crore and will make up for half of the disinvestment target.
The sale of 5 per cent stake or about 20.65 crore shares of SAIL at the current market price of around Rs 85 a piece would fetch the exchequer about Rs 1,800 crore.
According to a government official, “SAIL will be disinvested first as it a company that is fully prepared, it will be followed by others. Road shows are important to demonstrate what that company is all about and helps attract investors.”
“We will very soon start with the process of appointing merchant bankers. The disinvestment of all power PSUs will be finalised next month,” the official added.
Earlier the Cabinet had in July 2012 approved a 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of disinvestment of 5.82 percent was completed in March 2013.
Besides, the DoD is in the process of finalising a Cabinet note for a 10.96 per cent stake sale in NHPC and 5 per cent each in PFC and REC.
An anticipated resistance from Coal India Employees could pose a problem for the government as it embarks on the disinvestment process. CIL will be a big ticket stake sale and is likely to fetch the government Rs 23,000 crore which is nearly half the investment target of government.
The Cabinet had earlier approved stake sale in Coal India but it could not go through because of opposition from the CIL trade unions. CIL had to make up for it by paying a hefty special dividend.
