In what is likely to be the biggest disinvestment exercise of 2015-16, the Cabinet Committee of Economic Affairs (CCEA) on Wednesday cleared a 10% divestment in Coal India Ltd (CIL), the country’s largest coal miner. The government, which currently holds 79.65% in the coal miner, is looking to raise Rs 20,000 crore through the stake sale.
“The government has approved sale of 10% stake in Coal India Ltd,” coal and power minister Piyush Goyal said after the Cabinet meeting.
The decision to sell CIL shares comes amid growing fears that the government could find it tough to meet its disinvestment target of Rs 69,500 crore for the current fiscal year due to unfavourable market conditions.
It is not clear when the share sale would actually take place.
Apart from choppy markets, the government could find it tough to convince Coal India’s unions, who have been opposing the proposed stake dilution.
In August, the government had divested a 10% stake in Indian Oil Corp Ltd (IOCL), but the share price fell below the floor price due to choppy markets. Life Insurance Corp reportedly picked up more than 85% of the shares on offer, and helped the company raise Rs 9,300 crore.
Apart from IOCL, the government has also sold 5% stake each in Power Finance Corp, Rural Electrification Corp and Dredging Corp of India, and raised more than Rs 3,300 crore.
Besides, it has held roadshows for selling a 5% stake each in power major NTPC Ltd and defence public sector undertaking Bharat Electronics Ltd. Taken together, the two stake sales could fetch the exchequer Rs 6,400 crore.