The government on Monday approved part sale of its stake in two power utilities – National Thermal Power Corporation NTPC and Satluj Jal Vidyut Nigam -- and the proceeds will be channeled into an investment fund that finances social sector schemes.
The Cabinet Committee on Economic Affairs (CCEA) gave its nod to sell five per cent of its stake in NTPC and 10 per cent in Satluj Jal Vidyut Nigam (SJVNL), Commerce Minister Anand Sharma told reporters after the meeting.
In NTPC, which made an initial public offer in 2004, the government will divest stake through a Follow-on Public Offer. "The funds would be raised through the Follow-on Public Offer (route)," Power Secretary H S Brahma told PTI, adding that the FPO can be expected by December this year.
After the five per cent stake dilution, the government's holding in NTPC would come down to 84.5 per cent. "To make it inclusive and participatory, part of the shares would be offered to the employees of the state-run firms," Sharma said.
Given the current market conditions, the company would be able to mop up Rs 8,500 crore through the stake sale. NTPC's market capitalisation stands at Rs 1,77,350 crore.
The CCEA also approved offloading 10 per cent of the Centre's 75 per cent stake in SJVNL, which is a 75:25 joint venture between the Centre and Himachal Pradesh government.
The proceeds would go into the National Investment Fund set up in 2005. 75 per cent of the income of NIF is used to finance select social sector schemes and would help bridge the government ballooning fiscal deficit. PTI