nd NHPC Ltd fell after a cabinet committee on Wednesday approved the partial sale of government stake in these companies. ONGC fell as much as 2%, Coal India 2.9% and NHPC 4%. The government will sell a 5% stake in ONGC, the country’s biggest energy explorer, 10% in Coal India, the world’s biggest coal miner, and 11.36% in NHPC, the state-owned hydropower producer. It currently owns 68.94% of ONGC, 89.65% of Coal india and 85.96% of NHPC. At current prices, the government will raise around Rs.43,800 crore from these sales—Rs.23,000 crore from Coal India, Rs.18,000 crore from ONGC and Rs.2,800 crore from NHPC. The money will be used to bridge the fiscal deficit and fund public works projects to lift economic growth. Earlier this week, NHPC informed the Union power ministry that it may report a loss in the current fiscal year, dealing a potential blow to the National Democratic Alliance (NDA) government’s plan to sell a stake in the company. The failure to start the construction of the Lower Subansiri project in Arunachal Pradesh, delay in payments by the Jammu and Kashmir government and low tariff that does not cover high construction costs will have a Rs.988 crore impact on NHPC, it said in a 20 August communication to the power ministry. “All these issues will have an impact on the share valuation of the company also and may adversely affect the disinvestment proposal in a significant way. The board of directors has desired that these issues may be brought to the kind notice of the ministry of power at the highest level for early resolution,” NHPC said. The finance ministry is seeking to capitalize on positive investor sentiment generated by the formation of a stable government after the election and hopes of economic revival after two consecutive years of sub-5% economic growth. The budget set a disinvestment target of Rs.58,425 crore, including Rs.15,000 crore from the sale of residual stakes in the erstwhile government companies.
ONIKA JAISWAL
PGDM 2ND YEAR
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