Union Cabinet approves sale of shares in ONGC, Coal India, NHPC
Commencing the mammoth disinvestment drive, the CCEA (Cabinet Committee on Economic Affairs) headed by Prime Minister, approved the sale of shares in Coal India, ONGC and NHPC to garner a combined Rs 43,000 crore.
At current market prices, the sale of shares in state-owned CIL, ONGC and NHPC could bring over Rs 23,000 crore, Rs 18,000 crore and Rs 2,800 crore respectively, assisting the government meet its disinvestment target of Rs 43,425 crore for this fiscal. CCEA cleared 10% stake dilution in CIL (Coal India Limited), 5% in ONGC (Oil and Natural Gas Corporation Limited) and 11.36% in NHPC (National Hydroelectric Power Corporation) via the Offer For Sale (OFS) route.
The government has earlier missed its disinvestment goal for 5 successive financial years:-
- 2010-11 and 2011-12: Government could raise Rs 22,144 crore and Rs 13,894 crore via disinvestment, against the budgeted target of Rs 40,000 crore in each year.
- 2012-13: Govt. could raised Rs 23,956 crore, as against the target of Rs 30,000 crore.
- 2013-14: Government could raise Rs 16,027 crore, as against the budgeted aim of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore.
A planned stake sale in CIL in 2013-14 had to be deferred after stiff opposition from the trade unions. The coal major had to make up for that by paying about Rs 19,000 crore as dividend to the exchequer. The government, which holds a 89.65% stake in CIL, initially sought to divest a 10 per cent stake but lowered it to 5% on account of opposition from the unions. Government holds 85.96% stake in NHPC. The stake sale would help the company comply with the minimum 25% public shareholding norm of market regulator SEBI.
The disinvestment department has already selected three merchant bankersfor managing the NHPC stake sale:
- Edelweiss Financial
- IDFC Capital
- HSBC Securities
In the current fiscal, the government plans to mop up Rs 43,425 crore from selling its stakes in PSUs.