The Hindu : Front Page : Cabinet Committee allows three power PSUs to tap capital market

Online edition of India's National Newspaper
Friday, Nov 24, 2006
ePaper

Front Page

Front Page

Cabinet Committee allows three power PSUs to tap capital market

Special Correspondent

NEW DELHI: The Union Cabinet's Committee on Economic Affairs on Thursday approved the Power Ministry's proposal to allow its three public sector undertakings to come out with IPOs (initial public offerings) to raise money from the market to meet their additional capital requirements.

The Power Grid Corporation would come out with an IPO not exceeding 24 per cent of its paid-up capital. The IPO would be issued in tranches. The first tranche would be for10 per cent of its paid-up capital.

The Power Finance Corporation would, in turn, come out with an IPO amounting to 10.22 per cent of its post-issue capital equivalent to 11,73,16,700 equity shares. The Rural Electrification Company's IPO would amount to 20 per cent of its paid-up capital equivalent to 15.6 crore shares.

Announcing the decision, Finance Minister and CCEA spokesperson, P. Chidambaram, said the Power Ministry would decide the timing of the issue of the IPOs. It would probably be in the fourth quarter of the current fiscal. An inter-ministerial group would work out details of the IPOs.

Asked whether the Government took the Left concurrence, he said the decision was consistent with the National Common Minimum Programme. It clearly provided for PSUs accessing the market to raise additional capital.

Joint venture for hotel chain

The U.S-based Hilton International Company would be allowed to invest 26 per cent equity amounting to $143 million (Rs. 643 crore) in a joint venture firm for developing a chain of hotels and service apartments and to set up a wholly owned subsidiary involving an investment of $28.8 million (Rs. 130 crore) for operation and maintenance of its hotels here.

The CCEA also cleared a proposal of Urban Infrastructure Venture Capital Limited to raise capital up to Rs. 2,300 crore from non-resident Indians and other foreign investors for its second Urban Infrastructure Opportunities Fund (UIOF- II) with a greenshoe option of Rs.460 crore for NRIs and foreign investors. The total inflow of foreign investment as a result of the transaction will be up to Rs. 2,484 crore.

The meeting approved the proposal by Peninsula Realty Fund, Mumbai, to allow overseas investors to invest through a special purpose company in units to be issued for investment in FDI-compliant projects of the Fund up to Rs. 1,596 crore.

Chaired by Prime Minister Manmohan Singh, the CCEA decided to allow the development of 603 km of national highways in the northeast on a BOT annuity basis. There were no takers for earlier bids on a BOT toll basis.

It approved a Rs. 562-crore package for revival of the Nagaland Pulp and Paper Company.

Subvention

The Cabinet decided to extend to cooperative banks the subvention provided to public sector banks, regional rural banks, and the National Bank for Agriculture and Rural Development to enable them to provide short-term loans at seven per cent interest to farmers. The government liability would come to Rs. 1,955 crore — Rs. 825 crore to the public sector banks, Rs. 188 crore to the regional rural banks, Rs. 612 crore to the NABARD and Rs. 330 crores to the cooperative banks.

It was also decided to sign a protocol amending the air service agreement with Switzerland to promote more trade, investment, tourism and cultural exchanges.

The National Rural Employment Guarantee Scheme would be extended to Jammu and Kashmir.

ATR approved

The Cabinet approved the action taken report, to be tabled in Parliament, on the 2002-03 report of the National Commission for Minorities (NCM). The recommendations included having an investigating agency in the NCM, due representation to minorities in the police and the Central paramilitary force and permission for Sikhs to carry kirpans, up to six inches long, aboard Indian flights within the country.

Printer friendly page
Send this article to Friends by E-Mail

Front Page