PSU disinvestment to begin with NHPC and OIL

09 Jul 2009

The government will kick-start its public sector unit disinvestment programme with an initial public offering by National Hydroelectric Power Corporation (NHPC) in August, followed by Oil India Ltd (OIL) in September.

NHPC hopes to raise Rs 1,670 crore by selling 10 per cent of fresh equity capital. The government will divest 5% of its stake. ''NHPC's IPO will come in August; the company has already started roadshows,'' power secretary HS Brahma said.

NHPC is looking to raise cash for its investments worth Rs28,000 crore in the 11th Five-Year Plan for doubling its power generation capacity. It will offer 1,670 million equity shares, of which 1,110 million would be fresh equity while the remaining the government's sale of 5 per cent stake.  The post-issue public shareholding will be 10 per cent.

The finance minister in his union budget speech this month had announced the centre's goal for disinvestment for this year. (See: Budget goes easy on disinvestment; to realise Rs1,120 crore this year)

OIL will sell 11 per cent fresh shares, and the government will sell 10 per cent of its stake to other oil PSUs such as Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum. The issue will expectedly raise Rs4,700 crore capital for expansion. After disinvestment, the government's stake will decline from 98.13 per cent to 78.5 per cent.

Other ministries too are reportedly considering potential candidates. According to coal minister Sriprakash Jaiswal, disinvestment is necessary for all coal sector PSUs, including Coal India Ltd and Neyveli Lignite Ltd.