Faced with strong opposition from workers’ unions, the Centre has decided to shelve its plan to offload a 5 per cent stake in state-run miner Coal India Ltd (CIL).

The Government has been preparing for the disinvestment in the coal miner for almost a year now and had even held roadshows abroad.

The decision to shelve the stake sale was taken following Prime Minister Manmohan Singh’s meetings with the unions last week.

As an alternative, CIL is expected to announce a higher dividend than last year, to help the Centre narrow the fiscal deficit.

With general elections scheduled for the first half of 2014, the CIL board may consider paying an interim dividend, while approving the third-quarter financial results.

The world’s largest coal producer paid its highest-ever dividend of 140 per cent, amounting to Rs 8,843 crore, in 2012-13.

Of this, nearly Rs 7,964 crore went to the Union Government for its 90 per cent stake in the company. The Centre was hoping to raise at least Rs 20,000 crore through a 10 per cent disinvestment in CIL.

Buyback option Due to strong objections from labour unions, the Government later decided to raise the targeted amount through a five per cent disinvestment and 5 per cent share buyback by CIL.

Global investors particularly favoured the buyback option as it would enable CIL to reduce a part of its Rs 62,000-crore cash reserve (as in June 2013) — a tad lower than its annual turnover of Rs 68,303 crore in the last fiscal — and help improve the earnings per share.

While it is not clear if the share buyback plan is still on, the Government was forced to withdraw the divestment plan after trade unions called for a three-day strike from December 17.

> pratim.bose@thehindu.co.in

Related Topics
comment COMMENT NOW