Government begins process for road map on divestment

The government has asked all ministries to compile a list of state-run firms for sale of stake and listing on stock exchanges, even as it expects partial divestment in at least three such firms by the end of this fiscal.

"We have already initiated inter-ministerial discussions for identifying central public sector undertakings," Disinvestment Secretary Sunil Mitra told a press conference here, following up on the recent decisions on divestment by the cabinet.

"Each undertaking had different net-worth and different strengths. Each company will be taken up on a case-by-case basis and presented before the government for approval," Mitra added.

There are over 400 public sector undertakings under the administrative control of the central government, out of which nearly 50 are listed on the bourses.

The secretary said as per statistics available for 2007-08, there were 10 listed state-run firms with less than 10 percent public holding. Some 50 others met the criteria of having made profits in the past three years with a positive net worth.

Thus far, decision has already bee taken to sell shares in three companies - NTPC, Sutlej Jal Vidyut Nigam and Rural Electrification Corp - before the end of this fiscal.

Among them, two of them are listed on the bourses. In NTPC, the government holding is at 89.5 percent, while in Rural Electrification Corp, the state holds 81.82 percent stake, with the rest with the public, including institutions.

Mitra also clarified on how the proceeds from stake sale will be utilised and said it would be go toward capital expenditure of social projects identified by the Planning Commission and approved by the government, rather than the National Investment Fund.

The secretary also quoted Finance Minister Pranab Mukherjee as having said that in past three months, the market capitalisation of National Hydroelectric Power Corp and OIL had jumped 106 percent and 177 percent respectively, after divestment.

As a result, he said, the total value of the residual holding of government in these two companies - which had raised Rs.4,260 crore -- has also increased by 78 percent and over 121 percent, respectively.

Mitra also said that when the government diluted its stake in NTPC five years ago, it fetched Rs.2,700 crore. "Now, it is expected to fetch at least three times the amount."

Last updated on Nov 13^th, 2009 at 15:47 pm IST--IANS