Govt in line to reach divestment target with buy-backs touching Rs20,000 crore

The centre is expected to meet the fiscal year's divestment target of raising R56,500 crore, with share buy-backs by cash-rich PSUs alone set to reach Rs20,000 crore by October.

The government expects to raise Rs36,000 crore through stake sales in public sector undertakings and another Rs20,500 crore from strategic disinvestment.

With Rs17,000 crore of stake already divested and another Rs2,711 crore expected from sale of shares of NHPC, the centre is expected to raise around Rs20,000 crore by October.

The government is effectively tapping share buybacks by cash-rich PSUs for divestment of its stake and proceeds from share buybacks alone are expected to touch about Rs17,000 crore next month.

While Coal India Ltd and Bharat Electronics Ltd have announced plans to buyback their equity shares next month, state-run Nalco has already bought back 644.3 million equity shares that will fetch Rs2,835 crore.

Meanwhile, NMDC and MOIL are also in the midst of similar exercise that are expected to raise Rs7,527 crore and Rs863 crore, respectively.

More state-run firms are expected to restructure capital through share sale or stock split if not through expansion as instructed by the finance ministry, adding around Rs15,000 crore to the government's divestment kitty.

This could take total divestment so far this fiscal to well over Rs30,000 crore, say finance ministry sources.

Sources said firms such as BHEL and other PSUs in sectors such as power and oil may announce plans for buyback of their shares. CIL's buyback offer, which will open on 3 October, is estimated to raise Rs3,650 crore, while BEL's buyback could raise about Rs2,171 crore.

Receipts from these exercises will be added to the Centre's disinvestment proceeds that are targeted at Rs56,500 crore for 2016-17.

The Department of Investment and Public Asset Management is also working on a line-up for minority stake sales.

Meanwhile, the government is reported to be re-evaluating the sale of a 5 per cent stake in ONGC now that the oil and gas explorer will not bear any part of the subsidy burden arising out of under-recoveries from the sale of fuels.

At current stock prices, the stake sale could fetch the government in excess of Rs11,000 crore. On Monday, the ONGC stock was ruling at Rs250.50.

A possible stake sale could reduce the government's shareholding in the upstream oil company to 63.93 per cent from the current 68.93 per cent while moving closer to its FY17 disinvestment target of raising Rs56,500 crore.