Union Cabinet approves sale of shares in ONGC, Coal India and NHPC

Thursday, 11 September 2014 08:06 Pradeep B

DisinvestmentThe government on 10-09-14 cleared three big-ticket stake sale proposals in public sector units that could raise over Rs 45,000 crore in FY15, making the fiscal deficit much less challenging. The Cabinet Committee on Economic Affairs (CCEA), in its meeting on Wednesday, approved disinvestment of government equity in three state-owned firms including Coal India Ltd, ONGC Ltd and NHPC Ltd.

Unfazed by opposition by coal unions that are threatening to go on strike, the CCEA has cleared 10 per cent stake sale in CIL. "There has to be a firm approach to such threats. Disinvestment will ultimately improve the performance of these PSUs," said a senior finance ministry official, stressing that the government will go ahead with the planned stake sale. Earlier, a planned stake sale in the coal major in November last year was deferred because of opposition from CIL unions.

If the stake sale goes through, it would help raise more than half of the total disinvestment target of Rs 58,425 crore this fiscal. On Wednesday, the CIL scrip closed at Rs 373.85 a piece, implying that a sale of 10 per cent stake or 63.16 crore shares in CIL would fetch the government over Rs 23,600 crore.

Meanwhile, the CCEA also approved a 5 per cent stake sale in ONGC that would fetch over Rs 19,000 crore. The ONGC scrip closed at Rs 445.30, down 0.79 per cent, on the BSE.

The CCEA also approved a proposal to sell 11.36 per cent government stake in NHPC that could fetch over Rs 2,800 crore to the Exchequer.

The three stake sales will give much comfort to the Centre that is trying to fund an ambitious fiscal deficit target of 4.1 per cent in FY15.