As the government faces hurdles in meeting its disinvestment target for the year, finance minister P Chidambaram is likely to hold an internal meeting next week to review the progress so far and to look at ways for speeding up stake sales.
Sources in the North Block say given the lack of headway in the disinvestment process for Coal India (CIL), Bharat Heavy Electricals (BHEL), Indian Oil and the government's residual stake sales in Hindustan Zinc-Balco, there is now a sense of urgency in the finance ministry.
With roughly two months to go for the vote on account in Parliament, Chidambaram is likely to impress upon CIL and BHEL to decide on a special dividend or buyback by mid-January. His meeting with officials, including the economic affairs secretary Arvind Mayaram and disinvestment secretary Ravi Mathur, is tentatively scheduled for December 26.
ďThe government is the majority stakeholder in CIL, so we can tell them to call a board meeting to consider a buyback or special dividend as an alternative to stake sale opposed by the trade unions,Ē a senior official said, but added that for now, all three options were on the table.
Earlier this month, Prime Minister Manmohan Singh had asked the oil and heavy industry ministries to consider special dividend or buybacks as alternatives to stake-sales for CIL and BHEL. CIL had a board meeting on Monday, but it deferred a decision on dividend till February. For CIL, the biggest obstacle is that its unions are opposed to any sort of stake-sale.
A sharp 30% drop in power and military equipment maker BHEL's share price in the past one year has forced the Centre to put the planned 5% stake sale on hold. Additionally, the oil ministry also wants a 10% stake sale in Indian Oil Corp to be put on hold. The company's shares have dropped 50% since the proposal was first mooted in 2010. The roadshows held abroad saw a very cold response from investors.
The Centre has set a target to raise R40,000 crore from stake sales in public sector enterprises for FY14. Disinvestment remains a crucial plank on which rests Chidambaram's promise to rein in the fiscal deficit for the year to 4.8% of GDP. Additionally, the government also hopes to earn at least R15,000 crore from a residual stake sale in Hindustan Zinc and Balco to Anil Agarwal's Vedanta Resources, the majority stakeholder in both the companies. The Centre