The Prime Minister's Office has asked power ministry not to go ahead with the sale of five per cent government stake in Power Finance Corporation and come up with a fresh proposal for the company's maiden public offer.
"The PMO has told power ministry that the government would not like to sell its share in PFC but the company should be allowed to go ahead with its IPO plans," senior officials said.
The power ministry would now have to draft a fresh Cabinet note for the IPO to raise its equity base by 10 per cent, which amounts to 10.3 crore shares.
When contacted power ministry sources said the process has already been initiated for getting fresh cabinet approval.
Before the disinvestment process was halted due to opposition from supporting Left parties and DMK, the UPA government had decided to piggyride on the PFC public offer and sell its five per cent shares in the market as part of disinvestment.
The company had even filed the draft prospectus with the market regulator Securities and Exchange Board of India. The SEBI approval came on July 16 and it had three months to hit the market.
PFC was offering 15.45 crore equity shares of Rs 10 each. This included 10.304 crore new equity shares and an offer for sale of 5.15 crore equity shares by the government.
The issue would have constituted approximately 13.64 per cent of the post-issue fully diluted equity share capital of PFC.
If the original plan had gone through, the share of the government in the company would have come down to 86.36 per cent from the present 100 per cent.