By BS Reporter
The Cabinet today approved a 9.5 per cent stake sale in state-owned power generator NTPC Ltd, hoping to raise Rs 13,000 crore. The move is part of the government’s effort to meet its ambitious disinvestment target of an overall Rs 30,000 crore this financial year, to rein in a burgeoning fiscal deficit.
“The Cabinet Committee on Economic Affairs has allowed offloading 9.5 per cent paid-up equity capital in NTPC,” a senior official close to the development said, adding that the offer was likely to fetch around Rs 13,000 crore at the current price.
The government holds 84.5 per cent stake in the company. The disinvestment, which includes selling 783 million shares, would bring down the government’s stake to 75 per cent.
NTPC went public with an initial public offering (IPO) in 2004. In February 2010, the government had further offloaded five per cent stake to raise Rs 8,480 crore. The issue was subscribed over 100 per cent then, though the retail portion attracted only 0.14 times subscription.
Despite the mammoth target, the government has failed to carry out any disinvestment so far this financial year. Stake sale in two public sector undertakings (PSUs) — steel maker Rashtriya Ispat Nigam and National Aluminium Co —have already been deferred owing to pricing-related issues.
Friday’s stake sale in Hindustan Copper would finally kick off the disinvestment process. The disinvestment department has lined up Oil India and NMDC stake sale in December, which could be followed by NTPC.
The Maharatna power generator had reported a minor 1.3 per cent increase in net profit last financial year at Rs 9,224 crore, compared to Rs 9,103 crore registered during the previous financial year.