Satluj stake dilution hits Himachal roadblock | business | Hindustan Times
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Satluj stake dilution hits Himachal roadblock

business Updated: Feb 18, 2009 11:58 IST
Anupama Airy

The government’s plan to divest shares in five public sector undertakings has hit a roadblock even before it took off. The state government of Himachal Pradesh has objected to the proposed disinvestment in Satluj Jal Vidyut Nigam Ltd, one of the five PSUs identified for disinvestment.

Himachal Pradesh is the central government’s joint venture partner in this hydro power generation company, with a 25 per cent stake.

The government plans to list SJVNL by offloading 10 per cent of its equity in the company to the public.

In a recent letter to the department of disinvestment, the ministry of power said the government of Himachal Pradesh does not propose to dilute its equity holding in SJVNL. “They have taken a firm stand that even if Government of India (GoI) proceeds with disinvestment, the share of equity of the government of Himachal Pradesh should remain unchanged,” the letter states.

Further, according to the power ministry, the state government has conveyed that in the event of any disinvestment, “the government of Himachal Pradesh should have a first right of refusal of this offloading of equity in SJVNL.”

A senior power ministry official requesting anonymity told Hindustan Times that the main difficulty in the disinvestment of SJVNL is the provision in its Articles of Association, which states that an equity ratio of 3:1 has to be maintained at all times between the central (75 per cent) and the state government (25 per cent).

“Therefore, if issue of fresh equity is resisted by the state government, the disinvestment of GOI’s shareholding is also not possible because in that case, unless state government also disinvests proportionately, the 3:1 will not be maintained,” the official said.

Power ministry officials said that while all efforts are being made to persuade the state government, the department of disinvestments has suggested that if Himachal does not accede to the Centre’s request, the ministry of power should get the Articles of Association of SJVLN suitably amended.