With the current fiscal inching towards its final leg and the Government managing to garner just a paltry Rs 2,800 crore till now through selling its stake in public sector undertakings (PSUs) out of its ambitious disinvestment target of Rs 40,000 crore, the Mines Ministry now all of a sudden seems to be showing urgency to expedite the process of selling its residual stakes in Hindustan Zinc ltd (HZl) and Bharat Aluminium Company (Balco) – through which it aims to garner around Rs 18,000 crore.
According to official sources, the Mines Ministry which till now was mulling over the law Ministry’s advise to it on the matter – that of amending the Act under which the two companies were nationalised, before divesting its stakes in them – has now decided to include the option of auctioning the residual stakes also as an alternative proposal.
Informed sources told The Pioneer that the Cabinet Note which the Mines Ministry has been preparing for selling its residual stakes in HZl and Balco, now also finds a mention of auctioning the stake as an option, along with that of amending the Act under which the two entities were nationalised in the mid 1960s.
Sources privy to the development justified the latest move by saying that keeping two options in the note would give the Cabinet greater flexibility in deciding the best possible measure, when the matter is brought before its consideration.
They added that the note is likely to be brought before the Cabinet as soon as by the end of this month.
The sudden inclusion of the auction route, sources said, points towards Government’s keenness to achieve its disinvestment targets as soon as possible, looking at the tardy speed at which the entire exercise is moving.
If the auction route is approved by the Cabinet, then it would be a major setback for the Vedanta Group, which holds majority stakes in HZl as well as Balco. In case of an auction, there would be other entities too in the fray to take up HZl as well as Balco’s stake apart from Vedanta.
Vedanta head Anil Agarwal has given enough feelers to the Government about his keenness to acquire the residual stakes in both the companies, though he is yet to receive any credible response from the Centre on his requests.
In October this year, Vedanta had renewed the shareholders nod for making offers to the Government of up to Rs 21,637 crore ($3.482 billion) for acquiring residual stakes in the two firms.
The Government currently holds 29.5 per cent stake in HZl and 49 per cent stake in Balco. The Vedanta Group holds majority stake in both the entities.
Another reason behind adding the auction route option in the Cabinet note, sources said was because apart from the Rs 40,000 crore disinvestment target for the current fiscal, the Government also has to fulfill the Rs 15,000 crore target (which is over and above the Rs 40,000 crore divestment target), through selling its residual stakes in various entities like HZl and Balco.
With the residual stake sale in both the entities expected to fetch it Rs 18,000 crore, the target would be easily exceeded.
Also with the ongoing Winter session facing turbulence over a host of issues ranging from the passage of lokpal Bill to the bifurcation of Andhra Pradesh, the possibility of seeking Parliament’s nod to amend the Act under which HZl and Balco were nationalised, looks remote.
In such a scenario, the auction route, if approved by the Cabinet, would hasten the entire exercise of residual stake sale in the two entities and help the Government garner the much needed funds for itself.