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February 08, 2007 17:13 IST
Overcoming resistance from the Left Parties, government on Thursday virtually re-initiated the divestment process by targeting Rs 1500 crore (Rs 15 billion) funds for the National Investment Fund through IPOs of three public sector power companies.
"The government will be piggybacking on the IPOS of Rural Electrification Corporation, Power Grid Corporation of India and National Hydro-electric Power Corporation to raise Rs 1500 crore for the NIF, which has no funds currently", Finance Minister P Chidambaram said.
The three PSUs together are targeting to raise Rs 2400 crore (Rs 24 billion), he said adding this was based on the estimated current book value of these unlisted companies.
By piggybacking on these IPOs the government hoped to garner funds for NIF, he said. Chidambaram said the External Affairs Minister Pranab Mukherjee had met the CPI-M leaders in January and told them that "no money was flowing into the NIF", the earnings of which are intended for restructuring PSUs and for meeting social sector requirements.
"Without getting into divestment, if and when IPOs (of these PSUs) are issued we will piggyback a small portion to put it in NIF", Chidambaram said.
After the issue of IPOs and the piggybacking on them, the government share in REC will come down to 81.22 per cent, while that in PGCIL and NHPC will be reduced to 86.36 per cent each, the minister said. When asked whether the government re-started divestment, Chidambaram said, "this is not a standalone divestment". He made it clear that the three companies will remain under the Public Sector after the IPOs. He said as and when the three IPOs are undertaken, along with that there will be piggybacking for mopping up funds for the NIF. Chidambaram said the government wanted to garner some value from the IPOs, which will only benefit the concerned PSUs and, therefore, decided to piggyback on them to compensate for dilution in the government holding. "It (piggybacking) is not for revenue expenditure or current expenditure. It is entirely for NIF, which was set up in 2005, after discussions with the Left parties. This is not disinvestment...", Chidambaram said. In the IPO of Power Finance Corporation, he said the government is not selling its shares.
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