Shan’s Blog

Overcoming resistance from the Left Parties, the government has virtually re-initiated the disinvestment process by targeting Rs 1500 crore funds for the National Investment Fund through IPOs of three public sector power companies.

“The government will be piggybacking on the IPOS of Rural Electrification Corporation (REC), Power Grid Corporation of India (PGCIL) and National Hydro-electric Power Corporation to raise Rs 1500 crore for the NIF, which has no funds currently”, Finance Minister P Chidambaram told reporters after a Cabinet meeting.

The three PSUs together are targeting to raise Rs 2400 crore, he said adding this was based on the estimated current book value of these unlisted companies.

By piggybacking on these IPOs the government hoped to garner funds for NIF, he said.

Chidambaram, said the External Affairs Minister Pranab Mukherjee had met the CPI-M leaders in January and told them that “no money was flowing into the NIF”, the earnings of which are intended for restructuring PSUs and for meeting social sector requirements.

“Without getting into disinvestment, if and when IPOs (of these PSUs) are issued we will piggyback a small portion to put it in NIF”, Chidambaram said.

After the issue of IPOs and the piggybacking on them, the government share in REC will come down to 81.22 percent, while that in PGCIL and NHPC will be reduced to 86.36 percent each, the minister said.

When asked whether the government re-started disinvestment, Chidambaram said, “this is not a standalone disinvestment”.

He made it clear that the three companies will remain under the Public Sector after the IPOs.

He said as and when the three IPOs are undertaken, along with that there will be piggybacking for mopping up funds for the NIF.

Chidambaram, said the government wanted to garner some value from the IPOs, which will only benefit the concerned PSUs and, therefore, decided to piggyback on them to compensate for dilution in the government holding.

“It (piggybacking) is not for revenue expenditure or current expenditure. It is entirely for NIF, which was set up in 2005, after discussions with the Left parties. This is not disinvestment…”, Chidambaram said.

In the IPO of Power Finance Corporation, he said the government is not selling its shares.

Chidambaram, said the Book-Cum Lead Managers (BRMls) would be appointed by the Central Public Sector Enterprise (CPSE) through competitive bidding.

The other intermediaries for the IPO would be appointed by the CPSE concerned by adopting its own procedure.

The price band/floor price and offer price would be proposed by the CPSE concerned and approved by the Ministers of Power and Finance.

All other activities relating to the IPO would be done by the CPSE concerned, Chidambaram added.

Government awards 52 oil and gas blocks under NELP-VI

The Government approved award of 52 oil and gas blocks to various companies, with ONGC walking away with 24 blocks, of the 24 blocks awarded to ONGC and its partner, 12 are in deep water, 10 onland and 2 in shallow water.

The Cabinet Committee on Economic Affairs has approved award of 52 blocks, Petroleum Minister Murli Deora said.

Finance Minister P Chidambaram said Reliance Industries will get seven deep water blocks, Oil India Ltd and its partners six, while Gujarat State Petroleum Corporation will get three.

The government had offered 55 exploration blocks under NELP-VI, but received bids for 52.

Govt nod for nuclear power project

A project aimed at meeting the uranium fuel requirements of the nuclear-power programme is expected to commence soon with the government deciding to give over Rs 13 crore to Andhra Pradesh for land acquisition.

A meeting of the Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh today gave its approval to deposit Rs 13,70,50,000 with the Andhra Pradesh government for the land acquisition for the Tummalapalle Mining and Milling Project.

The project in Cuddapah district is being set up by Uranium Corporation of India Limited, a public sector undertaking under the Department of Atomic Energy.

“The approval of the project will meet the uranium fuel requirement of the nuclear-power programme,” Chidambaram said.

Besides developing the area, the project will also provide direct employment to about 934 people in various categories.

Govt allows BEML to raise funds through public issue

The government has also allowed Bharat Earth Movers Limited (BEML) to raise funds through public issue of 49 lakh shares for its modernisation and expansion programme.

“The Cabinet Committee on Economic Affairs (CCEA) today gave its approval for allowing BEML to raise funds for its modernisation and expansion programme through public issue of 49 lakh shares of Rs 10 each,” Chidambaram told reporters after the CCEA meeting.

He said the price band would be decided by the Board of Directors on the written recommendation of the Book Running Lead Manager.

Currently the government held 61.23 percent stake in the company comprising 2.25 crore equity shares of Rs 10 each, while individuals and other institutions hold 38.77 of the equity, the minister said.

“After the public issue, the government equity would come down to 54 percent with the balance 46 percent being with institutions and the public,” he said.