Despite Neyveli lignite Corporation (NlC) facing problems with its trade unions and strong opposition from the Tamil Nadu Government, the Government has gone ahead and taken the proposal of offloading 5 per cent of its stake in the state-owned entity to the Cabinet Committee on Economic Affairs (CCEA), which will consider the matter in its meeting scheduled for June 21.
The move is expected to garner around Rs 700 crore for the Government. According to sources in the know, the issue was discussed threadbare between the Coal Ministry (which is the nodal ministry for the company) and the Department of Disinvestment (DoD) before it was decided to send it for CCEA's consideration.
The Government plans to sell its 5 per cent stake in NlC through the offer for sale (OFS) route and once the CCEA clears the proposal then the decision on its share price would be taken, sources informed. The decision to go for NlC's divestment comes as a surprise as Tamil Nadu's Chief Minister J Jayalalithaa just last month had written to Prime Minister Manmohan Singh, urging him not to go ahead with the process as doing so would lead to major labour unrest in the company.
Her major objection is that the public sector character of NlC should not be tampered with. In fact the opposition to the move by Jayalalithaa is quite similar to the opposition to NAlCO's disinvestment being shown in Odisha by the ruling BJD there. The BJD's stand is that any kind of stake sale in a PSU is like pawning one's gold and the party has been regularly rallies to oppose the Centre's move.
Earlier this year when the DoD had sought the Coal Ministry's opinion on Coal India ltd's (CIl) disinvestment, the ministry had informed it about the possibility of labour trouble within the Maharatna company over the proposed move. A decision on it is still pending within the Government.
In NlC's case even the company's Chairman B Surender Mohan had recently said that though there is considerable labour unrest owing to the Government's intentions of divesting its stake, the management has been trying to remove the apprehensions of the union.
There have been a few rounds of discussions between NlC's management and the union to discuss the matter. It is the one of the biggest PSUs in Tamil Nadu and has a staff strength of around 18,000 personnel. Interestingly though the issue of NlC's disinvestment has been referred to the CCEA, the Coal Ministry a month back had conveyed to the DoD apprehensions regarding the move.
The Government holds 93.5 per cent in NlC, and has been trying for quite some time now to sell a certain percentage of its stake in the PSU. However whenever it has tried to do so, it has faced opposition from trade unions, as well as on the political front. Recently, NlC had invited bids from global firms to acquire coal assets abroad for providing fuel security to its thermal power plants.
The state-owned firm has proposals for growth in power generation capacity and is expanding its activities not only in Neyveli but in other parts of the country. It has entered into a joint venture with Uttar Pradesh to set up a 1,980 MW power station at Ghatampur, near Kanpur.
During the current fiscal, out of the Rs 55,000 crore disinvestment target which the Government has kept for itself, Rs 40,000 crore is expected to be garnered through Centre offloading its stake in state-owned companies, while the remaining Rs 15,000 crore is to be generated by Government offloading its stake in companies where it has residual stake.