The Hindu Business Line : PSU disinvestment back on Govt agenda

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New Delhi Feb. 7 Public sector disinvestment is back on the Government's agenda. Now the plan is to raise resources through disinvestment of five to 10 per cent Government stake in three power utilities as well as increase their equity base by issuing fresh shares.

The Cabinet Committee on Economic Affairs (CCEA) is expected to take up on Thursday proposals for disinvesting 10 per cent Government stake in Rural Electrification Corporation (REC) and five per cent each in Power Grid Corporation of India Ltd (PGCIL) and National Hydroelectric Power Corporation (NHPC).

In July last year, the Prime Minister, Dr Manmohan Singh, had put on hold all PSU disinvestment decisions after objections were raised by the Tamil Nadu Chief Minister, Mr M. Karunanidhi, to the stake sale in Neyveli Lignite Corporation. Since then, only issue of fresh equity in select PSUs has been allowed by the Government.

According to the proposals to be placed before the CCEA on Thursday, along with disinvestments, fresh shares accounting for 10 per cent of the equity would also be issued. The shares would be sold through an initial public offer (IPO) through the book-building route.

Currently, Government holds 100 per cent stake in all these three companies. Post issue Government stake in REC would come down to 81 per cent while in case of PGCIL and NHPC the post issue Government stake would stand at 86 per cent in both the companies.

At present, REC has an equity of Rs 780 crore and the shares having a face value of Rs 10 each has a book value of Rs 53 each. In case of PGCIL, the equity base is Rs 3,620 crore and the Rs 10 face value shares have a book value of Rs 26 each.

In case of NHPC, the equity base is Rs 10,340 crore and the book value of the shares stand at Rs 14 each.

The CCEA would also consider issuing of 46 lakh fresh equity shares with a face value of Rs 10 each of Bharat Earth Movers Ltd (BEML) through a public issue. The company currently has a paid up capital of Rs 36.7 crore and an authorised capital of Rs 100 crore. The company, which is already a listed entity, is currently being quoted at around Rs 900 per share.

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