Thursday, June 11, 2009

Govt plans OIL, NHPC IPOs, aims to raise Rs 6,500 cr

The government plans to list only two state-owned companies — Oil India (OIL) and National Hydroelectric Power Corporation (NHPC) —this financial year through initial public offerings (IPOs) even as it aims to mop up Rs 6,500 crore via disinvestments by the year-end, a finance ministry official said.

The government will also dilute its holding in some companies where it holds more than 90% stake, including trading firms MMTC and State Trading Corporation of India (STC), as per a detailed annual disinvestment plan to be presented with the Union Budget in early July, said the official who requested anonymity.

The Budget will also contain the new government’s broad sell-off plans for its first three years. “The three-year plan will identify the public sector companies that will get priority in listing and spell out the broader policy to be followed in diluting government stake in the coming three years,” the official told ET.

The three-year roadmap gives the maiden offer of telecom operator BSNL precedence over that of Coal India and National Aviation Company of India (Nacil), the holding company of Air India. The government expects BSNL to command a valuation of more than Rs 1 lakh crore in an improved market. In all new listings of state-run companies, the government will sell its stake, rather than just issue fresh capital.

While the money raised from fresh capital goes to the company, the proceeds from the government’s stake sale go to the Centre, as was done in the case of NTPC in 2004. The finance ministry has already written to Oil India and NHPC to get listed, as the regulatory approvals for listing them will lapse on September 10 and September 15, respectively. Missing this deadline will delay the process by another six to seven months, officials said.

Despite its clear sell-off plan, the government is yet to decide on the timing for dissolving the National Investment Fund, which maintains the money raised through disinvestments, and putting all the proceeds in the Consolidated Fund of India, said another finance ministry official. “Disinvestment proceeds can no longer be ring-fenced and kept out of the Consolidated Fund of India.

As there is no legislation mandating National Investment Fund, it can be wound up anytime through a Cabinet decision,” said the official, who also requested anonymity. It’s not clear if this announcement will be made in the coming Budget. Three professional fund managers manage the National Investment Fund, which has been in existence since 2007 after the government collected Rs 995 crore from stake dilution in Power Grid Corporation. Its corpus was close to Rs 1,900 crore last December.

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