The Gvernment on Wednesday approved the sale of shares in Coal India, ONGC and NHPC to garner a combined Rs 43,000 crore.
“Disinvestment proposals of ONGC, Coal India and NHPC have been cleared by the Cabinet Committee on Economic Affairs,” an official source said after a meeting of the CCEA, headed by Prime Minister Narendra Modi. At current market prices, the sale of shares in state- owned CIl, ONGC and NHPC could garner over Rs 23,000 crore, Rs 18,000 crore and Rs 2,800 crore respectively, helping the Government meet its disinvestment target of Rs 43,425 crore for this fiscal.
CCEA has cleared 10 per cent stake dilution in CIl, 5 per cent in ONGC and 11.36 per cent in NHPC through the Offer For Sale (OFS) route, sources said. Earlier this week, the disinvestment department had selected 5 merchant bankers -- Citigroup and HSBC Securities, UBS Securities, ICICI Securities and Kotak Mahindra Capital for managing the stake sale.
The ONGC scrip closed at Rs 445.30, down 0.79 per cent, on the BSE. The merchant bankers will advise the Government on the timing and modalities of Offer For Sale (OFS) and ensure best returns to the Government, which holds 68.94 per cent stake in ONGC. The Cabinet nod for the ONGC stake sale comes as the Petroleum Ministry too has consented to the stake sale.
The Government had last sold 5 per cent stake in ONGC in 2012 for Rs 14,000 crore. At today’s closing share price of Rs 373.85, a sale of 10 per cent stake or 63.16 crore shares in CIl would fetch the Government more than Rs 23,000 crore. This will make up for more than half of the total disinvestment target for the current fiscal, 2014-15, during which the government plans to mop up Rs 43,425 crore from selling stake in PSUs.
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. At the current market price of Rs 22.40 a piece of NHPC share, sale of 11.36 per cent or 125.76 crore shares would fetch over Rs 2,800 crore to the exchequer.
Government holds 85.96 per cent stake in NHPC. The stake sale would help the company comply with the minimum 25 per cent public shareholding norm of market regulator Sebi. The disinvestment department has already selected three merchant bankers -- Edelweiss Financial, IDFC Capital and HSBC Securities-- for managing the NHPC stake sale.
In the current fiscal, the Government plans to mop up Rs 43,425 crore from selling its stakes in PSUs. The previous Government had cleared disinvestment in SAIl and according to sources the 5 per cent stake sale in the state-owned steel maker is likely to hit the markets this month. The sale of 5 per cent stake or about 20.65 crore shares of SAIl at the current market price of around Rs 80.95 a piece would fetch the exchequer over Rs 1,600 crore.
The Cabinet had in July 2012 approved 10.82 per cent stake sale in SAIl. Accordingly, the first tranche of disinvestment of 5.82 per cent was completed in March 2013. The Government has missed its disinvestment target for five consecutive financial years. In 2010-11 and 2011-12 fiscals, the Government had raised Rs 22,144 crore and Rs 13,894 crore through disinvestment, against the budgeted target of Rs 40,000 crore in each year. In 2012-13, it had raised Rs 23,956 crore, as against the target of Rs 30,000 crore.
In 2013-14, the Government could raise Rs 16,027 crore, as against the budgeted target of Rs 40,000 crore. The target in revised estimates was scaled down to Rs 16,027 crore. The Government also approved Rs 287.67 crore for payment of statutory dues and salary among others to employees of eleven loss-making central public sector enterprises including Hindustan Cables, HMT Machine Tools and Nagaland Pulp and Paper Co.
The dues will be paid for the period between September 1, 2013 and March 31, 2014. The statutory dues include provident fund, gratuity, pension, employees state insurance and bonus. The non-plan budgetary support of Rs 287.67 crore will be provided to the 11 sick/loss-making CPSEs that fall under the Department of Heavy Industry.
“Payment of outstanding dues of salary and wages would mitigate the hardships of the employees. The payment would also motivate them for giving better output and prepare them to achieve the goal of revival/re-structuring of these companies. In addition, clearance of outstanding statutory dues would result in fulfilment of statutory obligations,” an official release said.