PSU body cautions on fast divestment
While the UPA government has finally got its stalled disinvestment programme going, it has received a note of caution from SCOPE, which has urged the government to calibrate the plan so that it does not lead to a quick flood of public sector listings, reports HT Correspondent.business Updated: Oct 25, 2009 22:11 IST
While the UPA government has finally got its stalled disinvestment programme going, it has received a note of caution from the Standing Conference of Public Enterprises (SCOPE), which has urged the government to calibrate the plan so that it does not lead to a quick flood of public sector listings.
“There should be no flooding of offers of public sector companies in stock markets or else it would eat into their valuations,” SCOPE Chairman Arup Roy Chowdhury told Hindustan Times.
SCOPE is the apex body representing all central government-owned public sector companies.
“In order to ensure maximum value for public sector companies’ shares, there should be a detailed schedule worked out. The decision on the timing of when to raise money from the stock markets should be left to the professional management and respective boards of the companies,” Roy Chowdhury said.
Last week, the government approved stake sales in power producing companies NTPC Ltd and Satluj Jal Vidyut Nigam (SJVN), marking the first steps to kickstart the programme to divest government equity in state-owned firms.
The Cabinet Committee on Economic Affairs or CCEA approved the proposal for a 5 per cent stake sale in NTPC and a 10 per cent stake sale of government equity in Satluj SJVN.
On Friday, steel major SAIL informed the Bombay Stock Exchange (BSE) that the Finance Ministry has given its in-principle approval for 20 per cent disinvestment in it.
Earlier this month, Prime Minister Manmohan Singh said the government is keen on unlocking the value of public sector enterprises by listing them on bourses. Since the United progressive Alliance government came to office for the second term this May, two PSUs — NHPC and Oil India — have gone public.