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NLC disinvestment process kicks off

business Updated: Feb 22, 2010 22:12 IST

The government has begun the process of disinvestment in Neyveli Lignite Corporation (NLC), already listed on the bourses, through a follow on public offer (FPO).

“You (ministry of coal) are requested to convey the views on the disinvestment of government equity in NLC through an FPO latest by February 15 2010 so that the progress in this case can be reported to the Cabinet Secretary and the Minister of Finance by the end of February, 2010,” the Department of Disinvestment (DoD) said in a recent letter.

The move assumes significance as the DMK in June 2006 had threatened to withdraw support to the UPA government if it went ahead with its plan to disinvest equity in NLC. This had effectively stalled the disinvestment programme in the company for three years.

Coal India Ltd (CIL) and NLC are two public sector units (PSUs) identified by the DoD for disinvestments of government’s equity. While the department has got the nodal ministry’s nod on the disinvestment of CIL but a formal response for carrying out the same process in NLC is still awaited, said a official in the DoD.

“We have asked the coal ministry to give its firm views on disinvestment in NLC.”

The DoD is in the process of finalising a disinvestment plan commencing from April 2010 for which it has asked key economic ministries to hold consultations with managements of various state-owned companies under their control.

Plans are also afoot for an FPO by state-owned PowerGrid Corporation by September this year, sources said. Consultations have already been held and a proposal has been sent to the Power Ministry for further consideration of the Finance Ministry. “The FPO can be expected by September," according to PowerGrid Chairman and Managing Director S.K. Chaturvedi.

Powergrid, engaged in building transmission network throughout the country, plans to raise fresh equity of about 10 per cent to fund its expansion plans and is hoping to mop up Rs 3,500 crore from the FPO.