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   THE government plans to sell 5% of its stake in NTPC, the country’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.

   “This proposal is likely to come up for approval by the Cabinet Committee on Economic Affairs (CCEA) at its meeting,” said a government official privy to the development. At the current market price, the issue will fetch the government Rs 8,500 crore.

   “The 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,” 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 government’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 government’s previous regime as the Common Minimum Programme didn’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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