May collectively add R13,800 cr to govt’s kitty; shares end mixed post-announcement
The Cabinet Committee of Economic Affairs (CCEA) on Wednesday cleared the government’s proposal of partial stake sale in IOC and NTPC in order to boost the government’s record disinvestment target for fiscal 2016.
The Centre is looking to sell 5% stake (41.22 crore shares) in the Delhi-based NTPC and 10% stake (24.27 crore shares) in the state-owned IOC constituting 24.27 crore shares. At Wednesday’s close price, the government may fetch a total of R13,800 crore from the two transactions.
Sources in the know said the government intends to begin the disinvestment process in a phased manner instead of rushing at the fag-end of the year. The new strategy is to keep a pool of companies ready for disinvestment and launch the deal when the timing is opportune. That was demonstrated after the Centre raised R1,610 crore after parting with 5% stake in the power financier REC in the first week of April, data on the India’s Disinvestment Department showed.
In addition to IOC and NTPC, the Centre has also proposed to sell minority stake in ONGC (R13,335 cr), NMDC (R5,234 cr), BHEL (R2,784 cr), Power Finance Corp (R1,746 cr) at current rates.
The government is also looking to sell stake in a handful of the 33-companies that need to comply with Securities and Exchange Board of India (Sebi) minimum public shareholding norms. The list includes Coal India (4.65%) which could fetch the exchequer close to R11,622 crore.
For FY16, the Centre has set a record disinvestment target of R69,500 crore of which R41,000 crore is estimated from stake sale and an additional R28,500 crore from strategic disinvestment. Previous year, the government had set a target of R63,425 crore but managed to raise only half of the target.