Ministries get cracking on divestment

The government is moving fast to generate additional resources from the sale of its stake in public sector enterprises.

The coal and mines ministry has put the sale of the government's residual stake in Balco back on track and the heavy industry ministry has agreed to a dilution of equity in Bharat Heavy Electricals Ltd.

The power ministry has also cleared a proposal to sell up to 24 per cent in Power Finance Corporation.

Government officials told Business Standard that the heavy industry ministry had written to the department of divestment, saying Bhel did not require additional funds at the moment but was willing to go ahead with the proposed dilution of the government's holding "to realise macro-economic fiscal objectives."

The finance ministry, which had proposed to sell 16 per cent in Bhel, will have to approach the Cabinet for the stake sale. The government currently owns 67 per cent of the company.

While clearing PFC's public offer, the power ministry has left it to the company to decide on a timetable. PFC's board has cleared the sale of a 10 per cent stake in the first stage. The company will seek the Cabinet's approval for the public offer in the current financial year.

In the case of Balco, the coal and mines ministry has put a proposal before Prime Minister Manmohan Singh to appoint AF Ferguson as the adviser for the sale of the government's remaining 49 per cent to Sterlite.

The government had time till December to sell the residual stake but could seek an extension, an official said.

The divestment department is awaiting a clearance from the power ministry before going ahead with its proposal to sell the government's stake in Power Grid Corporation.

The government is planning to raise Rs 4,000 crore (Rs 40 billion) from divestment this fiscal year, of which Rs 2,600 crore (Rs 26 billion) has been generated from the National Thermal Power Corporation's initial public offer and another Rs 1,100 crore (Rs 11 billion) from sales undertaken last year.