PM asks ministries to expedite PSU stake sale process

With the Centre’s disinvestment target lagging way behind the target, Prime Minister Manmohan Singh on Tuesday asked ministries of Coal and Heavy Industries to explore options like share buyback and special dividend to meet the budget estimate of Rs 40,000 crore.

 After a meeting with the prime minister on divestment, Finance Minister P Chidambaram said Ministry of Heavy Industries and Coal Ministry have been asked to work out the best option for raising proceeds as alternative to disinvestment. The three options are buyback, dividend payments and divestment.

 Coal Minister Sriprakash Jaiswal and Heavy Industries Minister Praful Patel too attended the meeting.

  The government has budgeted to raise Rs 40,000 crore from minority stake sale in PSUs in the current fiscal. With eight months of the fiscal already over, it has managed to garner only over Rs 1,325 crore through stake sale in six PSUs. Chidambaram had recently said that the government was on track to meet its fiscal 2014 disinvestment target.

 The stake sale of Coal India (CIL) has been hanging fire for long due to opposition from trade unions.

Besides, BEHL disinvestment is also facing roadblocks of unfavourable market conditions as the company's share price has taken a beating since its disinvestment was approved in 2011.

 The government had originally planned to divest 10 per cent in CIL, but after stiff opposition from unions, it lowered it to 5 per cent or 31.58 crore shares. At the current market price of Rs 274.30 apiece, CIL stake sale could fetch over Rs 8,600 crore.
 The government currently holds 90 per cent stake in CIL.

 Besides, by selling 5 per cent stake or 8.28 crore BHEL shares at the current market price of Rs 158.40, the exchequer could reap in over Rs 1,300 crore.

 In addition to disinvestment, the government is also looking at selling residual stake in Hindustan Zinc Ltd (HZL) and Balco.