With workers' unions holding to ransom Coal India ltd's (CIl) stake sale plans, and Ministries of Heavy Industries and Power putting a spanner in Government's ambition of raising funds by divesting its share in State-owned entities like (Bharat Heavy Electricals ltd) BHEl and National Hydroelectric Power Corporation (NHPC), it seems unlikely for the UPA Government to meet the ambitious Rs 40,000 crore disinvestment plan it has set for itself for the current fiscal.
In addition to this, the weak market conditions and heavy fall in share prices of some of the entities in which the Government aims to divest its share, has also made the target stiffer. Though the Department of Disinvestment (DoD) has been claiming that it would be able to meet the Rs 40,000 crore target, a section within the Government strongly feels that this could be easier said than done. The difficulty in achieving the figure can be gauged from the fact that in the first quarter of 2013-14, the Government had targetted around Rs 25,000 crore by divesting its stake in CIl and Indian Oil ltd (IOC) alone. However till date, it has been able to collect only Rs 1,300 crore by divesting its stakes in entities like Neyveli lignite Corporation (NlC), State Trading Corporation (STC), MMTC, and ITDC.
Official sources said that Government was hoping to garner Rs 20,000 crore by divesting 10 per cent of its stake in CIl. After objections and threats of nation-wide stir by the unions, the Coal Ministry reduced the offloading share to 5 per cent, but a major section of the union, mainly the All India Coal Workers Federation (AICWF) is opposed to the very idea of a public sector undertaking (PSU) being put up for disinvestment. While talks between the Coal Ministry and the unions are still on, the deadlock has put the Government's plan of pocketing Rs 20,000 crore through CIl disinvestment on hold. As it is, Coal Minister Sriprakash Jaiswal has already announced that his ministry will go ahead with 5 per cent divestment in CIl, which will only get it Rs 10,000 crore.
The Government, sources said, was also hoping to get around Rs 5,000 crore by divesting 10 per cent stake in IOC, before June 30. However the proposal received the Cabinet's nod only on August 2. Here too, instead of the originally planned Rs 5,000 crore, the Government would be able to get Rs 3,695 crore only as the oil major's share prices have come to Rs 193 per share and the sale of its 19.16 crore shares would only fetch this much to the exchequer. IOC's divestment had originally been planned at a share price of Rs 290 per share, which would have given the exchequer Rs 5,000 crore, sources said.
If this was not enough, sources privy to the information said that the Heavy Industries Minister Praful Patel has raised strong reservations about any disinvestment plans in BHEl, considering the fact that the company's shares have hit a nine-year low of Rs 120 per share and owing to poor demands for power sector equipments, its order book too has shown a lot of depletion in the recent past. In this scenario, sources informed that though the Cabinet had cleared the proposal of divesting Centre's 5 per cent stake in BHEl in November 2011, the plan could be put on hold owing to the poor condition of the company's finances as well as its reduced capital expenditure.
Also the fact that the disinvestment of BHEl has been hanging fire since close to two years, sources pointed out that the Heavy Industries Ministry is learnt to have put its foot down on any further delays on this front, saying that whenever news of the power equipment maker's divestment comes out, it sends out a lot of negative sentiments among global investors, which has reflected in its gradually depleting share price. The Power Ministry too is learnt to have objected to disinvestment plans in NHPC, owing to poor market conditions and investor sentiments. The Government has plans to offload 11.3 per cent of its share in the company which would get it Rs 2,400 crore.
If all this was not enough, sources further informed that poor market conditions forced the Government to sell shares of MMTC (which garnered Rs 571 crore to it) at a 70 per cent discount from the original price. At this pace, when by the end of the first quarter of the current fiscal, Government has managed to garner only Rs 1,300 crore through disinvestment, sources close to the development said that achieving the Rs 40,000 crore target seems highly unlikely as of now and it would require some tough negotiations on part of the Centre to achieve this.