Disinvestment secretary Ravi Mathur acknowledged on Friday that the government would find it difficult to meet the budgeted FY14 PSU disinvestment target and would have to rely on special dividends from public sector companies to make up for the shortfall.

?Our disinvestment target is Rs 40,000 crore and Rs14,000 crore is to be got from residual stake sales. We are looking at special dividend plus disinvestment. It is not pure divestment,? Mathur said. ?One can’t exclude special dividend as the Coal India stake sale is not happening. So you have to count special dividend,? he added.

Heads of ONGC, Coal India and SAIL and officials from Nalco, who met finance minister P Chidambaram to discuss capital spending plans for this fiscal, said they had been asked for special dividends.

ONGC’s Sudhir Vasudeva said while the company will maintain dividend that it paid last fiscal, any decision on special dividend will be made by its board. |Petroleum secretary Vivek Rae said that GAIL will pay the same regular dividend as last year. Coal India’s S Narsing Rao, and SAIL’s CS Verma also said that any decision on special dividend will be made by their respective boards.

SAIL had paid Rs 826 crore in dividends for FY13, while GAIL had paid Rs 1,217 crore. ONGC and Coal India paid Rs Rs 8,128 crore and Rs 8,842 crore in dividends for FY13.

The government faces problems on multiple fronts regarding its disinvestment target. There has been stiff opposition from all the companies and ministries concerned and the progress so far has been very slow. It has so far managed to garner just Rs 3,000 crore from stake sales in seven PSUs, including Power Grid Corp, Hindustan Copper, National Fertilisers and MMTC.

The finance ministry thus wants higher dividends from PSUs. Coal India is one of those planned disinvestments that does not look likely to happen as unions have threatened to go on strike if there is any stake sale. Hence the government has asked for a special dividend.

According to sources, the special dividend is expected to yield about Rs 9,000 crore to the government, which is higher than last year’s record dividend of Rs 8,842.91 crore to the government from the company.

The finance ministry has also warned that it will not accept any dividend, which is lower than last year. The industry seems to be irked with the government’s demand for higher dividend and are asking for a clear cut policy on dividend as they feel that this year it would difficult to dole out higher dividend payout as bottom lines have slacked.

This is the second time this week that Chidambaram met heads of PSUs. On Tuesday, he met heads of Indian Oil, Oil India, BHEL, NTPC and Power Grid to access their capacity to give dividends to the government and their capex plans for the rest of the year.

“Oil India gave 50% and IOC gave 30% of profit after tax as dividend last year. We may see lower than last year dividends from IOC and Oil India due to government’s divestment plans and lower profits after tax,” Rae said.