Reducing the disinvestment in CIL to 5% means the government will get R10,000 crore instead of the earlier target of R20,000 crore, which may lead to a shortfall in the disinvestment target. This can be averted if the Maharatna PSU agrees to buy back 5% shares from the government.
Coal minister Sriprakash Jaiswal claimed that the unions may agree to the proposal of 5% disinvestment. For the remaining 5%, the government will devise some other mechanism, he said. When asked what the options are with the government for further 5% stake sale in the company, the minister said, There are many options.
However, unions stood their ground. Although the minister proposed only 5% disinvestment in CIL, trade unions have reservations and we oppose even that proposal, Ramendra Kumar, secretary of Indian Mine Workers Federation that is affiliated to the left-leaning All India Trade Union Congress, told FE after the meeting.
The percentage of disinvestment and a formal proposal including buyback and employee share will be decided only after the consultations with unions are over, said a finance ministry official looking into the CIL disinvestment.
The representatives of unions representing 3.57 lakh workers of CIL will meet coal ministry officials again on August 5 to end the deadlock.
On July 24, trade unions turned down coal ministrys proposal to offer 5% of CIL shares to employees and sell an equal amount in the market.
Trade unions have already put up a strike notice for production stoppage to oppose disinvestment, Kumar said adding that if the government goes ahead with the disinvestment, workers will go on strike.
The government is trying to bring the unions on board over CIL disinvestment as even a days strike will lower coal output by almost 2 million tonne given that CIL produces four-fifth of the countrys coal output estimated at 557 million tonne during 2012-13. A prolonged strike will impinge on the import bill. India had to import 135 MT of coal in 2012-13 as demand far outpaces supply.
Trade unions have been opposing stake sale in CIL since its proposal in April. While the finance ministry along with coal ministry and CIL were considering a mix of steps including a buyback of 2% stake by CIL and selling 10% through the offer for sale route and allocating 10% of the issue size to employees. Unions are not agreeable to any of the proposal.
If CIL stake sale does not go through, the government will find it difficult to rein in the fiscal deficit within 4.8% of GDP. The budget for 2013-14 targeted R40,000 crore from stake sale in companies such as CIL, IOC, NHPC, Engineers India, Rashtriya Ispat Nigam, Rashtriya Chemicals and Fertilizer and MMTC.
During 2012-13, the government raised the highest-ever R23,956 crore from stake sale but it still fell short of the budget target of R30,000 crore.