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Moily against stake sale in Powergrid

business Updated: Oct 28, 2012 23:26 IST
Anupama Airy
Anupama Airy
Hindustan Times
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As the government gets ready with its disinvestment plans for the current fiscal - with the Cabinet clearing the first divestment in NMDC - the power ministry has opposed the sale of government's equity in India's largest state-owned transmission company, the Powergrid Corporation of India Ltd.

In an October 10 letter to finance minister P Chidambaram, the outgoing power minister Veerappa Moily said that disinvestment of Powergrid has already taken place twice - in September 2007 and November 2010 - for 5% and 10% of share capital of the company respectively, fetching Rs. 994 crore and Rs. 3,721 crore to the centre.

"Any further disinvestment in Powergrid (proposed at 5% for this fiscal) may be deferred by the government at this stage as it may be detrimental to company's growth and power sector as a whole," Moily wrote to Chidambaram.



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The power ministry has recently also opposed Chidambaram's plans to push the disinvestment of the government's equity in NTPC, which is India's largest power generating company.

However, NTPC being a big ticket divestment - with the finance ministry expecting to rake in R13,500 crore or nearly half of its disinvestment target for the current fiscal from the NTPC issue alone - the contentions of the power ministry have been set aside with clear instructions to the department of disinvestment to proceed ahead with a 9.5% stake sale in the state-owned power firm.

Stating that the current debt-equity ratio of Powergrid is 70:30 - with debt at Rs. 58,000 crores and equity at Rs. 24,300 crores - Moily said that of all the 15 listed major central public sector undertakings (CPSUs), Powergrid is the most highly leveraged.

The government currently holds 69.42% stake in Powergrid and the proposed disinvestment is for sale of 5% equity.

Moily also told Chidambaram that an investment plan of more than Rs. 100,000 crore has been chalked out for the company, during the 12th 5-year Plan.