The UPA government needs to kickstart disinvestment to help bridge a rapidly rising fiscal deficit and to improve investor sentiment in an economy that is showing some small signs of recovery.

The best place to begin is the power sector, in companies like NTPC, NHPC and Power Grid Corporation. It is estimated that a 51% divestment in these companies would alone rake in Rs 60,000 crore over the next few years. Similarly, other government power companies which should look at the IPO route to infuse funds and increase capacity are Satluj Jal Vidyut Nigam, Power Finance Corporation of India, Rural Electrification Corporation, Power Grid Corporation and North Eastern Electric Power Corporation.

The government has been way behind targets in the power sector. And the investment required for new generation, transmission, distribution and rural electrification is pegged at around Rs 5,00,000 crore. Power companies could ultimately raise as much as Rs 1,50,000 crore from the market for their various expansion plans once investor sentiment in the stock market fully revives.

In the past two weeks, share prices of several PSUs have jumped by as much as 20%. Taking that cue, Oil India is chalking out its strategy for an IPO to raise Rs 1,300 crore, which would bring down the government?s stake in the company by 10%. The government currently holds 98.13% stake in the company. Similarly, NHPC, a 100% government subsidiary, is planning an IPO in September to raise Rs 2,500 crore. Both the companies have received regulatory approvals from Sebi and if the listing is not done immediately, there are chances that the approvals would lapse and the process will get delayed for another six months. Some of the other blue chip PSUs which are planning to go for IPO are Rites, Cochin Shipyard, Rashtriya Ispat Nigam.

Also in the pipeline, with a longer timeframe, for divestment are Hindustan Copper, Neyveli Lignite, Indian Oil Corporation and NMDC where the government holds about 85% stake and stocks of all these companies have rallied by around 25% in the past two weeks.

?saikat.neogi@expressindia.com