PSU public offers will kick off next month

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New Delhi: A day after finance minister Pranab Mukherjee promised a blueprint for disinvestment after “discussions with stakeholders”, the power, oil and steel ministries have begun walking the talk. The PSU sell-off programme will be launched with an initial public offering by National Hydroelectric Power Corporation (NHPC) in August, followed by Oil India Ltd (OIL) in September.

The steel ministry, meanwhile, has begun identifying potential candidates for stake sales from among a dozen or so PSUs in the next few months. Coal minister Sriprakash Jaiswal has already said that disinvestment was “necessary” for all coal sector PSUs, including Coal India Ltd and Neyveli Lignite Ltd.

At a conference on Wednesday steel minister Virbhadra Singh said, “We are considering the sale of stakes in companies under the ministry.” With the finance ministry hinting at beginning its disinvestment programme with follow-on public offerings by listed PSUs with a low public float, steel firms SAIL and National Mineral Development Corporation could be prime candidates.

The Centre still holds 85.82% shares in SAIL and 98.39% stake in NMDC, both Navratna firms. The average minimum float of all listed firms in India is less than 15% and finance minister Pranab Mukherjee has said all listed firms, including PSUs, should gradually raise their floating stock to at least 25% of equity capital

NHPC and OIL will be first to hit the market, though, as all their regulatory clearances have been in place for about a year. Both were set to launch public issues in October-November last year, but the collapse of Lehman Brothers in September and the consequent tumult in global markets forced the government to defer their share sale.

Since taking a PSU to the market takes three to six months of administrative paperwork, the disinvestment department had requested markets regulator

Sebi to give an extension to the draft red herring prospectus filed by NHPC and OIL.

Power secretary HS Brahma said, “NHPC's IPO will come in August; the company has already started roadshows.” NHPC hopes to raise Rs 1,670 crore by selling 10% of fresh equity capital. The government will divest 5% of its stake.

With the Centre keen on pushing up the country’s power capacity, NHPC needs cash urgently for the Rs 28,000-crore investments lined up for the 11 th Five-Year Plan in order to double its present generation capacity of 5,200 mw.