Tamil Nadu Chief Minister J Jayalalithaa’s proposal to allow state Public Sector Undertakings (PSUs) to buy the Union government’s 5 per cent stake in Neyveli Lignite Corporation (NLC) received approval from market regulator Securities and Exchange Board of India (SEBI) on Sunday.
“SEBI is of the view that the proposal could get covered within the guidelines on IPP (Institutional Placement Programme). However, the exact details need to be worked-out that require discussions with officials of the government of Tamil Nadu, Ministry of Coal and Department of Disinvestment,” the Finance Ministry said in a statement.
The announcement came within hours of Jayalalithaa writing to Prime Minister Manmohan Singh urging the Centre to accept her proposal immediately. “The government of India should immediately accept my proposal to sell the minimum required equity under the relevant regulations to Public Sector Undertakings of Tamil Nadu and direct SEBI to quickly work out modalities of such a transaction,” she said in the letter.
Meanwhile, the strike by over 27,000 NLC workers entered its fourth day and affected power production.
The Department of Disinvestment (DoD) had approached SEBI to give its consent on the TN government’s proposal. SEBI informed DoD that State PSUs could pick up stake through IPP route and they have to be registered with it as a Qualified Institutional Buyer.
“In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers, including State undertakings of Tamil Nadu,” said the Finance Ministry statement. The ministry has also requested Tamil Nadu to nominate a senior official to hold further discussions with SEBI.