Govt to sell 5% stake in IOC, 10% in NTPC to raise around Rs13,500 cr

The government will sell 5 per cent of shares in state-run oil refining and marketing company Indian Oil Corporation (IOC) and a 10 per cent stake in power company NTPC, that could fetch a total of Rs13,500 crore ($11 billion) to its kitty from asset sales this financial year.

At current market prices, the proposed sale of a five-per cent stake in NTPC is expected to fetch the government Rs5,565 crore, while the sale of 10 per cent in IOC would bring in Rs7,932 crore, adding up to nearly Rs13,500 crore.

The government holds 74.96 per cent in NTPC and 68.57 per cent in IOC, according to the BSE data.

"The cabinet has approved 5 per cent disinvestment in NTPC and 10 per cent in Indian Oil Corporation (IOC)," official sources said after the cabinet meeting.

NTPC has a market capitalisation of Rs1,11,313.77 crore, while IOC commands a market value of Rs79,321.21 crore, as per current Bombay Stock Exchange (BSE) data.

Finance minister Arun Jaitley has set a divestment target of Rs69,500 crore in Budget 2015-16, including Rs41,000 crore through PSU stake sale in the current fiscal and another Rs28,500 crore through strategic stake sales.

While the government has set the ball rolling, it is still not clear which PSU would hit the markets first.

The government last month sold 5 per cent in REC and raised Rs1,550 crore last month. It has cabinet approval to sell of 5 per cent stake each in ONGC and Bharat Heavy Electricals (BHEL),

For the current fiscal, the government has identified more than a dozen PSUs for stake sale, including National Fertilisers, MMTC, Hindustan Copper and ITDC, besides the sale of residual stake of 10 per cent each in NALCO and NMDC.

NTPC was trading at down Rs3.50 (-2.47 per cent) at Rs138.00 while IOC was up Rs1.65 (0.50 per cent) at close of trading on the Bombay Srock Exchange (BSE).