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New Delhi, Sept. 10: The Modi government today kick-started the divestment process by approving a stake sale in Coal India, ONGC and NHPC, which is likely to fetch the exchequer about Rs 43,000 crore this financial year.
The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved a sale of 10 per cent government stake in Coal India, 11.36 per cent in NHPC and 5 per cent in ONGC through the offer for sale (OFS) route, sources said.
The offer for sale route is similar to selling shares on the bourses through an auction.
“The decision to disinvest would help the government realise an optimum price for the offer for sale of 10 per cent of the government’s shareholding in the company,” an official statement said.
A planned stake sale in CIL in 2013-14 had to be deferred after stiff opposition from the trade unions.
The coal major had to make up for that by paying about Rs 19,000 crore as dividend to the exchequer.
If the government can offload a 10 per cent stake in the monopoly coal miner, it can earn at least Rs 23,000 crore from the sale at today’s closing share price of Rs 373.85. The government holds an 89.65 per cent stake in CIL.
The previous Congress government wanted to initially divest a 10 per cent stake in Coal India but subsequently lowered it to 5 per cent following objections by the trade unions.
The CCEA has also cleared a 5 per cent divestment in oil major ONGC Ltd, which may fetch the exchequer about Rs 18,000 crore at current market rates.
The ONGC scrip closed at Rs 445.30, down 0.79 per cent, on the BSE today.
Earlier this week, the disinvestment department had selected five merchant bankers — Citigroup and HSBC Securities, UBS Securities, ICICI Securities and Kotak Mahindra Capital to manage the ONGC sale.
The merchant bankers will advise the government on the timing and modalities of the offer for sale and ensure best returns to the government, which holds a 68.94 per cent stake in ONGC.
The cabinet nod for the ONGC stake sale comes as the petroleum ministry, too, has consented to the stake sale.
The government had last sold a 5 per cent stake in ONGC in 2012 for Rs 14,000 crore.
The cabinet has also cleared an 11.36 per cent stake sale in NHPC that could fetch over Rs 2,800 crore to the exchequer at the current market price of Rs 22.40 apiece.
The government holds an 85.96 per cent stake in NHPC. The sale would help the company comply with the minimum 25 per cent public shareholding norm of market regulator Sebi.
The disinvestment department has selected three merchant bankers — Edelweiss Financial, IDFC Capital and HSBC Securities — to manage the NHPC stake sale.
The stake sale in ONGC, NHPC and CIL will help the government to meet its divestment target for 2014-15.
The government plans to mop up Rs 43,425 crore from selling stakes in PSUs and another Rs 15,000 crore from the sale of residual stake in the erstwhile government companies such as SUUTI, Balco and Hindustan Zinc.
The previous government had also cleared a sale in SAIL and according to sources, the 5 per cent divestment in the state-owned steel maker was likely to hit the markets this month.
The sale of 5 per cent stake or about 20.65 crore shares of SAIL at the current market price of around Rs 80.95 apiece would fetch the exchequer over Rs 1,600 crore.
The cabinet had in July 2012 approved a 10.82 per cent stake sale in SAIL. Accordingly, the first tranche of 5.82 per cent was sold in March 2013.
The government has missed its selloff targets for five consecutive financial years. In 2010-11 and 2011-12, it had raised Rs 22,144 crore and Rs 13,894 crore, respectively, through divestment, against the budgeted target of Rs 40,000 crore in each year. In 2012-13, it sold shares worth Rs Rs 23,956 crore against the target of Rs 30,000 crore.
In 2013-14, the government could raise Rs 16,027 crore against the budgeted target of Rs 40,000 crore. The target in the revised estimates was scaled down to Rs 16,027 crore.
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