The government on Thursday approved the sale of 10 per cent equity in aluminium major NALCO and Neyveli Lignite Corporation to raise an estimated Rs 2,500 crore.
NEW DELHI: In trying to taste political water on the disinvestment front, the Manmohan Singh government on Thursday announced its decision to divest 10% of government stake each in National Aluminium Company Ltd (Nalco) and Neyveli Lignite Corporation (NLC).
It also reversed the NDA government’s decision to sell 5% stake in Engineering Projects India Ltd as the company had turned profitable.
But, it was soon apparent that the divestment in Nalco and NLC, being opposed by not only the Left parties but also Congress in Orissa, which is home to Nalco, is unlikely to be implemented smoothly.
Even while announcing the decision of the cabinet committee on economic affairs (CCEA), finance minister P Chidambaram did not convey the impression that the government would push the divestments come what may. “We are not going to hurry these disinvestments,” he said. “The process usually takes five-six months. The CCEA has taken the decision. We will wait for the right market conditions,” he said.
He declined to specify a timeframe for carrying out the two divestments and even indicated that these divestments may not take place during the current fiscal year. “The fiscal year is completely delinked from disinvestments,” he said.
Chidambaram claimed that CCEA’s decision is in continuance of its earlier decision to divest small portions of equity in non-navaratna PSUs and in line with the National Common Minimum Programme as well as consensus arrived at the Left-UPA coordination committee meeting on November 21, 2005 to mobilise resources for the National Investment Fund (NIF).
The finance minister said the proceeds from Nalco and NLC divestments would go to NIF and the returns earned by NIF would be spent on social sector programmes and revival of viable PSUs in the ratio of 75% and 25%. The amount to be raised from the divestments would depend on market conditions, he added.
As part of its efforts to divest a small portion of equity in non-Navaratna PSUs, the government had earlier cleared 10% stake sale in Power Finance Corporation and National Mineral Development Corporation.
Chidambaram said post-divestment of 10% stake each in Nalco and NLC, the government would still hold an “overwhelming majority of shares” of 77.15% in the aluminium company and 83.56% in the lignite company. “Needless to say that these two will very much remain PSUs,” he said.
The Left parties were, however, not buying any of the FM’s claims. Senior CPM leader Sitaram Yechuri denied that the left parties had agreed to the Nalco/NLC disinvestment proposal in the recent Left-UPA coordination committee meeting. The Left leaders will meet here shortly to discuss a plan of action against Nalco and NLC divestment.
CITU also strongly opposed the move. It said the finance ministry was pushing its own agenda despite the strong opposition of the employees, the trade unions, supporting parties of the government and in case of Nalco, even the Union mines minister.
The earlier disinvestment of 12.85% of Nalco had led to grabbing of 1.15% share by its competitor Hindalco and 2.91% by FIIs. CITU apprehends a similar entry of FIIs and other companies through further disinvestment.
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