Despite staring at the inevitability of achieving the Rs 40,000 crore disinvestment target which it had set for the current fiscal, the Government continues with its flip flop on the issue of its residual stake sale in Hindustan Zinc ltd (HZl) and Balco, with the Mines Ministry after having taken a painstakingly long time in seeking legal opinion on the matter, has now indicated that there is absolutely no issue in selling its share in Balco.
Sources close to the development told The Pioneer that though in the case of HZl, the Government is still in the process of seeking law Ministry’s opinion on whether to amend the Act of Parliament through which it was formed or auction out the residual stake in it - as far as Balco is concerned, stake sale in it can happen as it was incorporated as a public sector undertaking (PSU) in 1965 under the Companies Act and unlike HZl was not formed through a Parliamentary statute.
Though whether the Government’s supposed willingness on Balco’s residual stake sale by claiming it as a simple case having no complications, will turn out to be a happy augury for Anil Agarwal-led Vedanta Group (which holds majority stake in both companies and which has offered up to Rs 21,637 crore to buy the residual stakes in them to the Centre) remains to be seen, this sure indicates its desperation to at least garner some funds.
The confusion, however, remains as the Mines Ministry is yet to clearly spell out its plan as to how it would dispose off the residual stake in Balco. At the same time, sources confirmed to this newspaper that the Mines Ministry has “some confusion” regarding the Cabinet Note which it had sent to the law Ministry (seeking its opinion on whether to auction its residual stake in HZl or first go for an amendment of the Act of Parliament through which it was initially formed).
They added that though the law Ministry is yet to respond to the note, the Mines Ministry itself seems to be a house divided, as on one hand it has sought opinion on either of the two aforementioned options for HZl stake sale, at the same time a section within the ministry claims that the process should only go forward after the Act is amended.
Amid this confusion, time is fast running out for the Government to meet its disinvestment target for the current fiscal even as Vedanta’s frustrations are likely to grow. While the london-listed entity is ready to offer up to Rs 21,637 crore to the Government to buy out the residual stakes in both companies, confusion within the Mines Ministry has stalled the process.
At the same time, till date the Government has garnered just a paltry Rs 2,800 crore through selling its stake in various PSUs, whereas it is left with just three months in this fiscal to achieve the Rs 40,000 crore disinvestment target.
Achieving this looks all the more difficult as divestment of Coal India ltd and Indian Oil Corporation, through which the Government was looking to garner a major chunk of the target, looks difficult owing to weak market conditions and labour problems.