Tamil Nadu Chief Minister J Jayalalithaa today suggested to the Centre to sell 5 per cent shares it had proposed to disinvest in NLC to state PSUs for preserving the company's public sector character and resolving workers unions opposition.
In a letter to Prime Minister Manmohan Singh, she said the Centre could sell five per cent of its shareholding in the Neyveli Lignite Corporation to one or more of the state PSUs -- Tamil Nadu Industrial Development Corporation (TIDCO), State Industries Promotion Corporation of Tamil Nadu (SIPCOT) and Tamil Nadu Industrial Investment Corporation (TIIC).
The proposal by Jayalalithaa comes in the backdrop of the NLC trade unions threatening to strike work from July 3.
She said the aforesaid PSUs came within the ambit of 'Qualified Instituional Buyers' and fell under the meaning of "public" defined under relevant SEBI (Securities Exchange Bureau of India) rules.
She said her earlier proposals had not been accepted by the Centre. She had suggested to Singh about the possibility of delisting NLC by buying back the 6.44 per cent currently in public hands through the buyback mechanism available under SEBI regulations.
She had also suggested amending Securities Contracts (Regulation) Rules, 1957, to make a special exemption for NLC.
"I believe that this situation requires an unconventional and pragmatic solution. Therefore, I propose that the 5 per cent Government of India's shareholding in Neyveli Lignite Corporation be offered to one or more of Government of Tamil Nadu's State Public Sector Undertakings, ie. TIDCO, SIPCOT and TIIC," she said.
Such entities fell within the meaning of "public" as defined under Rule 2(d) of the Securities Contracts (Regulation) Rules, 1957. Offer of shares to them will ensure that NLC will be compliant with Rule 19 (2) and Rule 19A of the Securities Contracts (Regulation) Rules, she said.
SEBI had earlier indicated to NLC that under its guidelines it was possible for the shareholding to be divested, interalia, through an Institutional Placement Programme or through any other method as may be approved by SEBI, on a case by case basis, she said adding the mechanism "I have proposed can be facilitated by SEBI."
"The above-mentioned Government of Tamil Nadus Public Sector Undertakings come within the definition of Qualified Institutional Buyers (QIBs) and hence would be eligible to purchase the shares of Neyveli Lignite Corporation under an Institutional Placement Programme," she said.
SEBI may be asked to work out a special arrangement for such a placement of NLC's shares with the state government's Public Sector Undertakings at the approved rate, she told Singh.
She said she was suggesting "this offer of sale" to protect and preserve the "public sector" character of NLC and to assuage the feelings of the workers and the people of the region.
"I request you not to sell this equity to any other private entity. I am sure you will consider favourably this alternative proposal now suggested by me," she added.
The 'sensitive' issue has 'provoked' almost all trade unions and they were in a 'charged mood' she said.
She recalled they had announced plans of agitation, adding the unrest could spread leading to eventual shutdown of the power plants at Neyveli, causing much hardship to the people already reeling under power scarcity.
The Cabinet Committee on Economic Affairs (CCEA) had on June 21 cleared government's five per cent stake sale in NLC, which would help garner around Rs 466 crore to the exchequer.
The move has been squarely opposed by almost all political parties in the state including DMK and Jayalalithaa had twice written to Prime Minister against selling off the PSU's stakes.