In a bid to restart the disinvestment process, the government is planning to sell up to 10 per cent of its stake in the state-owned Coal India Ltd (CIL), the country’s largest coal producer.
“Our target is to disinvest a 10 per cent stake in Coal India by the end of the current year. Disinvestment in the coal sector is absolutely necessary,” Minister of State for Coal (Independent Charge) Sriprakash Jaiswal said at a media briefing.
The move is a part of a government’s proposal, where proceeds from the stake sale of major public sector undertakings (PSUs) will be used to bridge the fiscal deficit.
Earlier this month, President Pratibha Patil, while addressing the joint session of the Parliament, had said: “My government will develop a roadmap for listing and people-ownership of public sector undertakings while ensuring that the government equity does not fall below 51 per cent.”
The coal minister was announcing his ministry’s 100 days’ agenda, which included securing cabinet approval for setting up a committee to look into Coal India’s overseas investments. Another priority of the ministry would be to introduce forward e-auctioning of coal, as against spot auctioning done at present.
Earlier this week, the coal minister had said that the government is not averse to limited disinvestment in CIL.
The minister also said the proposed disinvestment is aimed at giving a boost to the rehabilitation and resettlement (R&R) policy of CIL by offering shares to people whose land is acquired for mining purposes.
Jaiswal had met Finance Minister Pranab Mukherjee earlier this week and informed him about the coal ministry’s intentions to offload a part of the government’s shareholding in CIL. This would, however, require the coal ministry to introduce a bill for an amendment in the Coal Mines Nationalisation Act, 1973.
The coal minister had also talked about a reduction in the customs duty levied on mining equipment with the finance minister. CIL, which has an authorised capital of Rs 8,000 crore, was accorded Navratna status in October last year. The company is expected to get listed within three years ending October 2011, as per rules. It recently reported a sharp fall in its net profit at Rs 96 crore during 2008-09 from Rs 5,243 crore in the preceding year. The fall was mainly on account of an increase in the wage bill.
Earlier this week, CIL Chairman Partha S Bhattacharya had said the company had initiated talks with the ministry for its initial public offer (IPO).
Coal India, along with its seven subsidiaries, accounts for around 85 per cent of the total domestic coal production. In the current financial year ended March 2009, the company is planning to produce around 435 million tonnes of the dry fuel as compared with 403 million tonnes produced in the previous year.
Meanwhile, the proposed disinvestment in CIL may meet with resistance from trade unions. The pro-CPM, Centre of Indian Trade Unions has sent a letter to the coal minister, asking him to prepare for the worst if the Government went ahead with dilution of state equity.
