AFTER A gap of seven months, the government on Thursday set into motion the process of disinvestment of small portions of its holdings in three public-sector enterprises — the Rural Electrification Corporation Ltd. (RECL), Power Grid Corporation of India Ltd. (PGCIL) and National Hydro-electric Power Corporation (NHPC).
The decision to disinvest stake will materialise in the next seven months, depending on the market conditions. The government will sell 10 per cent of RECL and 5 per cent each of PGCIL and NHPC. Also, the three companies will issue fresh equity of 10 per cent each. After disinvestment, the government holding in RECL will come down to 81.22 per cent, while in NHPC and PGCIL it will be 86.35 per cent.
The government hopes to collect Rs 1,500 crore from the exercise for the National Investment Fund (NIF), set up in 2005 to revive PSUs and to meet social-sector requirements like in education and health.
After a meeting of the Cabinet Committee on Economic Affairs, Finance Minister P. Chidambaram said: “The government will be piggybacking on the initial public offers of RECL, PGCIL and NHPC to raise Rs 1,500 crore for the NIF, which has no funds currently.”
Chidambaram said he and External Affairs Minister Pranab Mukherjee had met CPI-M leaders in January and told them that the National Investment Fund was dry.
But the CPI(M) said the IPOs were the first step to disinvestment and that the “government should stop the practice of riding piggyback on IPOs issued by PSUs. The government has decided to disinvest shares owned by it to the tune of Rs 1,500 crore. This is uncalled for.’’