PSU divestment target on track, says government

Hopes to mop up funds to the tune of Rs 40,000 cr in current fiscal

“We are quite confident of achieving the target of Rs 40,000 crore through disinvestment exercise as proposed in the Budget 2010-11…. There is enough appetite in the market,” Department of Disinvestment Secretary Sumit Bose told reporters here.

He indicated that disinvestment in many blue chip PSUs including cash rich oil firms like Indian Oil Corporation (IOC), Oil and Natural Gas Corporation (ONGC) and large size PSUs like Steel Authority of India Limited (SAIL) and Coal India Limited (CIL) would be carried out in the current fiscal 2010-11. “Efforts are on for disinvestment in the IOC and ONGC this year too,” Bose said.

In a bid to give a big push to the ongoing PSU disinvestment exercise the government has already approved two-pronged divestment in state-owned steel major SAIL to raise funds to the tune of Rs 16,000 crore by selling its equity and issuing fresh shares to the public.

The Cabinet Committee on Economic Affairs (CCEA) has approved the proposal for raising additional equity by the SAIL to the extent of 10 per cent of the paid up equity and divestment of government’s holding in the steel major by 10 per cent through offer for sale to be carried out in two separate tranches.  Currently government holds 85.82 per cent of equity in the SAIL.

The CCEA has also approved offloading of 10 per cent equity each in state-owned Coal India Limited (CIL) and Hindustan Copper Limited (HCL).

 At present, the paid up equity capital of the CIL is Rs 6316.36 crore and the government holds 100 per cent of the equity in the company.

Currently, the government holds 99.9 per cent stake in Hindustan Copper and after the stake sale it would drop to 81 per cent.  The stake sale is estimated to raise Rs 4000 crore.

Besides, the government plans to sell 5 per cent stake in ONGC and 10 per cent in Indian Oil Corp (IOC) to raise about Rs 25,000 crore this fiscal.

Petroleum Secretary S Sundareshan has recently revealed that the Petroleum Ministry has received a note from Department of Disinvestment saying that the Department has the approval of the Finance Ministry for divestment of government stake in ONGC and IOC.

Besides, the Cabinet has already given its nod for government’s stake sale in Power Grid Corporation and Manganese Ore India Limited.

As such the PSU disinvestment is overwhelmingly being expected to get a major boost this fiscal with the Cabinet decision that all listed profitable PSUs should have a public holding of at least 10 per cent and all profitable unlisted Central PSUs should be listed.

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