NEW DELHI: Disregarding the Left allies' opposition to disinvestment, the Centre on Thursday reinitiated the sell-off process by deciding to ride piggyback on the initial public offerings (IPOs) of three power sector public enterprises with the objective of mopping up Rs.1,500 crore for the National Investment Fund (NIF).

Briefing newspersons on the decision taken by the Cabinet Committee on Economic Affairs at its meeting here, Union Finance Minister P. Chidambaram said: "The Government will be piggybacking on the IPOs of the Rural Electrification Corporation (REC), the Power Grid Corporation of India Ltd. (PGCIL) and the National Hydro-electric Power Corporation (NHPC) to raise Rs.1500 crore for the NIF, which has no funds currently."

The three state-owned power companies were planning to enter the market for the first time to mop up about Rs.2,400 crore on the basis of their current book value estimates, as they were hitherto unlisted.

The Government, by riding piggyback on the IPOs, hoped to garner funds for the NIF.

Till date, not a single penny flowed into the investment fund, the earnings of which were meant to be utilised for restructuring the ailing PSUs and meeting the needs of the social sector. "Without getting into disinvestment, if and when the IPOs [of the three PSUs) are issued, we will piggyback a small portion to put it in NIF."

Following the IPO issues and the piggybacking, the Centre's equity holding in REC was slated to come down to 81.22 per cent, while its stake in both PGCIL and NHPC would stand reduced to 86.36 per cent each.

Asked if piggybacking could be seen as restarting the disinvestment exercise, Mr. Chidambaram said: "This is not stand-alone disinvestment."

Even after the IPOs and the small dilution of the Centre's stake in them, the three power companies would continue to remain in the public sector. There would be piggybacking for mopping up funds for the NIF, as and when the three IPOs were undertaken.

Explaining the intention behind the move, he said the Government wanted to derive some value from the IPOs and it would only benefit the three PSUs concerned.

"It [piggybacking] is not for revenue expenditure or current expenditure. It is entirely for the NIF, which was set up in 2005, after discussions with the Left parties. This is not disinvestments..." he said.

Mr. Chidambaram said the book-cum-lead managers for the issues would be appointed through competitive bidding.

The price band/floor price and offer price of the IPOs would be proposed by each PSU concerned and subsequently approved by the Ministers for Power and Finance.

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