A middle ground is being worked out to divest stake in Neyveli Lignite Corporation on the lines of minimum public holding norms of market regulator Sebi and pacify workers at the corporation who are up in arms over the stake-sale decision of the union Cabinet last week.
Market regulator Sebi has agreed to the Tamil Nadu government's proposal to let its state undertakings buy Centre's 5% stake in NLC, provided acquisition is done by a qualified state entity. The union finnace ministry today informed the state government about this and asked it to nominate senior officials for further discussions with Sebi.
As the workers at NLC have been on strike against the Union Cabinet decision to allow the Centre to sell its five per cent stake in the corporation, Tamil Nadu chief minister J Jayalalitha had writtedn to Prime Minister Manmohan Singh to resolve the issue.
The contention of the union government was that the move was necessary as the government had to off load at least 10 per cent stake to public to meet SEBI's norm of minimum public share holding. The government currently holds 93.56 per cent in the miner. The stake sale can fetch around Rs 700 crore.
As such, the chief minister asked the Centre to direct Sebi to work out modality to offer five per cent stake of the Centre to any of the state government undertakings.
Union finance ministry today informed Tamil Nadu,""Sebi is of the view that the proposal could get covered within the guidelines on IPP (Institutional Placement Programme). However, the exact details needs to be worked-out that require discussions with the officials of the government of Tamil Nadu, Ministry of Coal and Department of Disinvestment."
Sebi, sources said, has now asked the Tamil Nadu government to send a concrete proposal and the list of state PSUs which could buy shares in NLC.
The Department of Disinvestment (DoD) had sought Sebi's views on Tamil Nadu government's proposal to let its state undertakings buy 5 per cent of Centre's stake in NLC disinvestment.
Sebi has written back to disinvestment department last week saying that the 5 per cent stake sale should be done to the state PSUs through the IPP route. Also, the acquirer has to be registered with Sebi as a Qualified Institutional Buyer (QIB).
"In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers including state undertakings of Tamil Nadu," a statement by the finance ministgry added.
Source- Business standard