|NHPC's stalled Subansiri project|
THE government is all set to begin this year’s disinvestment drive, but the power ministry wants to ‘wait and watch’ on sale of stake in state-run hydel producer NHPC.
The ministry has approached the Department of Disinvestment (DoD) to wait for some more time before...selling stake in the firm, says an agency report.
The ministry feels that in the absence of a permanent chairman and managing director (CMD) and delays in execution of some of its projects, shares of the company may not get a good valuation, sources said.
The ministry believes that once these issues are resolved, they would give a boost to the company’s proposed stake sale.
RST Sai is the acting CMD of the company.
Before Sai, the post was held by G Sai Prasad was was working in the capacity of joint secretary in the ministry of power.
Some of the projects of NHPC are running behind time. One such project is the proposed 2,000 MW Subansiri hydro power project in Arunachal Pradesh.
The Subansiri Lower project has been stalled since December 2011 due to protest from local people raising issues related to its safety and downstream impact.
The original sanctioned cost of the plant was Rs. 6,285.33 crore which was revised to Rs. 10,667.09 crore and is now likely to touch Rs. 12,000 crore.
The other projects which have run into cost overruns are — Teesta Low Dam IV (West Bengal), Parbati II (Himachal Pradesh), Nimmo Bazgo and Uri II (Jammu & Kashmir). These projects have a combined capacity of 1,345 MW.
They are in various stages of construction and have exceeded the amount that was initially sanctioned.
Ministry of finance, which plans to collect over Rs. 58,000 crore through disinvestment during the current fiscal, has lined up PSUs including Coal India, ONGC and NHPC for stake sale.
Earlier, the government in September gave its nod for share-sale plans in three major state-owned companies — Coal India Limited (CIL) , National Hydroelectric Power Corporation (NHPC) and Oil and Natural Gas Corporation (ONGC) — that can potentially earn the exchequer Rs. 44,000 crore.
Revenue from selling shares in state-owned companies is critical to the government’s plans to keep the fiscal deficit at 4.1 percent of the gross domestic product (GDP) in 2014-15.
The CCEA cleared a 10 percent stake dilution in Coal India, 5 percent in ONGC and 11.36 percent in power company NHPC.
At current market prices, the sale of shares could garner over Rs. 23,000 crore, Rs. 18,000 crore and Rs. 2,800 crore, respectively.
Besides, the previous government had cleared disinvestment in SAIL and according to sources, the 5% stake sale in the state-owned steel maker could take place this month itself, fetching the Centre an additional Rs. 1,600 crore.
The Centre has already selected merchant bankers to manage the ONGC and NHPC offers and will likely do the same for Coal India shortly, although it has to convince labour unions opposed to share sale plans in the world’s largest coal mining company.
The cabinet approval came weeks after capital market regulator Securities Exchange Board of India approved sweeping new norms, including making it mandatory for listed PSUs to pare promoters’ shareholding to 75% within the next three years.
At present the government holds stakes of 85.96 percent in NHPC, 89.65 percent in Coal India, and 68.94 percent in ONGC.
But it has missed its disinvestment target for five consecutive financial years.
In 2010-11 and 2011-12, the government had raised Rs. 22,144 crore and Rs. 13,894 crore through disinvestment, against the budgeted target of Rs. 40,000 crore in each year.
In 2012-13, it had raised Rs. 23,956 crore, as against the target of Rs. 30,000 crore.
In 2013-14, its managed to raise Rs. 16,027 crore, as against the target of Rs. 40,000 crore.The target in revised estimates was scaled down to Rs. 16,027 crore.