What could be seen as a major breakthrough, the Finance Ministry has said that the Securities and Exchange Board of India (SEBI) has given its consent to the Tamil Nadu Government’s proposal to buy five per cent equity in Neyveli Lignite Corporation, provided the acquisition is done by a qualified State entity.
The Centre intends to sell its five per cent equity in Tamil Nadu-based Neyveli Lignite. This will help the company to meet SEBI’s norm on minimum public shareholding norm. The norm requires minimum public shareholding of 10 per cent in a CPSE by August. Currently, the Government owns 93.56 per cent in this company.
The Centre wanted to offload its equity through offer for sale mechanism. However, the Chief Minister of Tamil Nadu proposed that the State Undertakings of Tamil Nadu be sold the five per cent stake, which the Union Government plans to offload in Neyveli Lignite Corporation through an Institutional Placement Programme.
This could be done through State public undertakings such as Tamil Nadu Industrial Development Corporation, State Industries Promotion Corporation of Tamil Nadu and Tamil Nadu Industrial Investment Corporation.
The Centre discussed this proposal with SEBI.
“SEBI is of the view that the proposal could get covered within the guidelines on IPP. However, the exact details need to be worked out that require discussions with the officials of the Government of Tamil Nadu, Ministry of Coal and Department of Disinvestment,” a Finance Ministry’s statement issued on Sunday said.
In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers including State undertakings of Tamil Nadu, the statement added.
Now, the Finance Ministry has requested the Tamil Nadu Government to nominate a senior official for further discussions with SEBI with regard to its proposal.
According to the sources, SEBI has now asked the Tamil Nadu Government to send a concrete proposal and the list of State PSUs which could buy shares in NLC.
The Cabinet had last month cleared sale of 7.8 crore shares, or five per cent of Government’s stake, through an offer for sale in NLC to raise Rs 455 crore at current prices. Shares of NLC on Friday closed at Rs 58.30 on the BSE.
shishir.sinha@thehindu.co.in