The Cabinet is expected to take up the proposal to sell government’s 5 per cent stake in Neyveli Lignite Corporation tomorrow, which would help garner around Rs 450 crore to the exchequer.
The Cabinet Committee on Economic Affairs (CCEA) had earlier this month deferred a decision on the stake sale.
The Department of Disinvestment (DoD) has again moved the proposal for sale of over 7.8 crore shares or 5 per cent through an offer for sale (OFS) in the company.
The Cabinet would consider “disinvestment of 5 per cent paid-up equity in Neyveli Lignite Corporation (NLC) out of the Government’s shareholding of 93.56 per cent through OFS by promoters through stock exchange mechanism,” said the draft CCEA note floated by DoD.
Tamil Nadu Chief Minister Jayalalithaa had last month written to Prime Minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company. She had said that divestment in the company would lead to labour unrest and disruption of power supply.
The Disinvestment Department had communicated to the CCEA that there is no other option but to divest the government’s stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.
SEBI has set a deadline of August 2013 for all listed central public sector units to have a minimum 10 per cent public shareholding.
Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.