Divestment in ONGC, NHPC, Coal India to fetch Rs44,000 cr

11 September 2014

The government's move to sell shares in three major state-owned companies - Coal India Limited (CIL), National Hydroelectric Power Corporation (NHPC), and Oil & Natural Gas Corp (ONGC) - is expected to garner some Rs44,000 crore.

If successful, the government can more than meet the Rs43,425-crore target it had set for earnings from stake sales in public sector companies in the current financial year.

It would also be the most the government has ever earned as disinvestment revenue in a single year, surpassing the previous best of Rs23,857.25 crore in 2011-12.

Revenue from selling shares in state-owned companies is critical to the government's plans to keep the fiscal deficit at 4.1 per cent of GDP in 2014-15.

''Disinvestment proposals of ONGC, Coal India and NHPC have been cleared by the cabinet committee on economic affairs (CCEA),'' said an official statement after a meeting of the CCEA, which is headed by Prime Minister Narendra Modi.

The CCEA cleared a 10 per cent stake dilution in Coal India, 5 per cent in oil explorer and producer ONGC and 11.36 per cent in NHPC.

At current market prices, the sale of shares could garner over Rs23,000 crore, Rs18,000 crore and Rs2,800 crore, respectively.

Besides, the previous government had cleared disinvestment in SAIL and according to sources, the 5 per cent stake sale in the state-owned steel maker could take place this month itself, fetching the centre an additional Rs1,600 crore.

The government has missed its disinvestment target for five consecutive financial years. Last year, it could raise only Rs16,027 crore against a budgeted target of Rs40,000 crore.

The centre has already selected merchant bankers to manage the ONGC and NHPC offers  and will likely do the same for Coal India shortly, although it has to convince labour unions opposed to share sale plans in the world's largest coal mining company.

The cabinet approval came weeks after the Securities & Exchange Board of India approved sweeping new norms, including making it mandatory for listed PSUs to pare promoters' shareholding to 75 per cent within the next three years.

The government currently holds stakes of 89.65 per cent in Coal India, 85.96 per cent in NHPC and 68.94 per cent in ONGC.

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