PM writes to Jayalalithaa on disinvestment in Neyveli Lignite Corp

Prime Minister Manmohan Singh has written Tamil Nadu Chief Minister J. Jayalalithaa on the proposed disinvestment of a further five percent out of the government's equity in Neyveli Lignite Corporation.

The prime minister wrote that the move will neither lead to privatisation nor will it alter the public sector character of the company, an official release said Friday.

He said he had written in his letter of June 8 that the proposed disinvestment was needed for compliance with the minimum public shareholding requirement under the Securities Contract (Regulation) Rules, 1957.

"The proposed five percent disinvestment will neither lead to privatization nor will it alter the public sector character of the company. At present, the Government of India's shareholding is 93.56 percent and the remaining 6.44 percent shares are held by others. After a further dilution of equity by five percent, the shareholding of Government of India will be 88.56 percent," he said.

He said the "public sector" character of the company will not be affected at all as long as the Government of India continues to hold more than 51 percent of the shareholding in NLC.

The prime minister said that the fear that such a disinvestment would lead to privatisation is, therefore, unfounded and devoid of facts.

He said that the chief minister's suggestion that the Tamil Nadu State public sector undertakings purchase five percent out of government of India's shareholding in NLC has been discussed with SEBI, which has informed that the possibility exists for a state industrial development corporation to participate in an institutional placement programme, possibly with some preference.

"In order to give a final shape to the modalities of such an arrangement, I would request you to nominate a senior officer from the Government of Tamil Nadu to coordinate with the Department of Disinvestment and SEBI so that we can comply with the relevant rules before August 8, 2013," he said.

"I would also urge you to work towards resumption of normal power generation by NLC, so that the Southern Region, including Tamil Nadu, does not suffer on account of power shortages," the prime minister added.