Disinvestment Current Affairs

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Union Government to sell 10 per cent stake in IOC

Union government has announced to sell 10 per cent stake in state owned Indian Oil Corporation (IOC).

This disinvestment drive on the stock market through an offer for sale (OFS) will fetch Union Government about 9,500 crore rupees to the exchequer. The 10 per cent stake in IOC comprises 24.27 crore shares.

Presently, Union government holds around 68.57 per cent shares in IOC which is the biggest oil refining and marketing company in the country.

Stake sale of IOC will mark the fourth round of disinvestment drive of Union Government in year 2015. Other three rounds of disinvestment are being in carried in Power Finance Corporation (PFC), Rural Electrification Corporation (REC) and Dredging Corporation of India (DCI). So far from these disinvestment drives government has earned around 3,300 crore rupees.

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Union Cabinet gives nod to 5% disinvestment in NTPC & 10% in Indian Oil Corporation

Union Cabinet gave its approval to 5 per cent disinvestment in National Thermal Power Corporation Limited (NTPC) and 10 per cent in Indian Oil Corporation (IOC).

Decision in this regard was taken by Union Cabinet Meeting chaired by Prime Minister Narendra Modi in New Delhi.

These approvals are part of Union Government’s budgeted target to raise 41,000 crore rupees through strategic stake sales i.e. disinvestment for the current financial year 2015-16.

Disinvestment in both Central Public Sector Undertaking (CPSU) may fetch the government over 13,000 crore rupees at current market price.

The proposed share sale of 5 per cent in NTPC will fetch Union government 5,565 crore rupees while that of 10 per cent in IOC will bring in 7,932 crore rupees.

Currently, Union government holds 74.96 per cent in NTPC and 68.57 per cent in IOC.

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NTPC disinvestment raises Rs 11,000 crore

Following the target of Rs. 30,000 to be raised through disinvestment in this fiscal, the government has sold 9.5% share of NTPC through Offer for Sale (OFS) through which the government mobilized about Rs 11,400 crore (about $2.1 billion).

  • So far in the fiscal, the government has mobilized about Rs 20,000 crore though divestments of its stake in these companies, which is about 67% of its target.
  • This would also help the government remain closer to its fiscal deficit target of 5.3% of GDP. The recent change in rules for OFS, of allowing institutional investors to bid for stocks at no margin, helped the NPTC issue sail through.
  • Earlier, institutions had to put in full margin money while bidding in an OFS. Under the new rules, an institutional investor which is bidding in OFS without any upfront margin, cannot revise its bid price downward, while those bidding with full margin money can do so.

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