THE government plans to sell 5% of its stake in NTPC, the countryâ€™s largest power company, through a follow-on public offering in January, continuing its disinvestment programme that focuses on offloading minority stakes in select public sector undertakings.
â€œThis proposal is likely to come up for approval by the Cabinet Committee on Economic Affairs (CCEA) at its meeting,â€ said a government official privy to the development. At the current market price, the issue will fetch the government Rs 8,500 crore.
â€œThe details of the issue would be finalised by November and the follow-on public offer may hit the market in the second half of January 2010,â€ the official said, on condition of anonymity.
NTPC had last approached the market with its initial public offer in October 2004, when it had issued 5.25% fresh equity shares and sold an equivalent percentage of shares held by the government, mopping up over Rs 5,000 crore. Post-issue, the governmentâ€™s holding in NTPC had come down to 89.5% of the expanded capital of the company.
The United Progressive Alliance (UPA) government plans to raise at least Rs 10,000 crore in a year through stake sale in public sector companies, which is more than what the previous UPA government mopped up during its five-year tenure.
The current disinvestment proposal for NTPC follows a similar one in 2008 when the company had proposed that the government offload 4.75% of its equity in the company. This plan was rejected by the finance ministry during the UPA governmentâ€™s previous regime as the Common Minimum Programme didnâ€™t permit disinvestment in profitmaking navratna companies.
NTPC plans to add 22,430 mw to its installed capacity by the end of the 11th Plan to emerge a 50,000 mw power generation company. It reported Rs 8,201 crore as profit after tax in 2008-09, a 10.61% rise over the previous fiscal year.
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