Cabinet may take up Nalco, Neyveli divestment today

The Cabinet was likely to discuss a proposal tomorrow to divest 10 per cent government stake each in Neyveli Lignite Ltd and National Aluminium Co Ltd, a senior government official said today. The government currently holds 87.15 per cent stake in Nalco and 93.56 per cent in Neyveli.

"The Cabinet is likely to take up the proposal for 10 per cent stake sale in both the public sector companies," the official said.

That the UPA government is contemplating sale of stakes in the two companies shows that it wants to go ahead with divestment of small stakes in PSUs despite opposition from its allies.

While Left parties are opposed to stake sale in any profitable state-owned company, the government's ally in Tamil Nadu, DMK, is against dilution of state holding in Neyveli Lignite, which has its headquarters in Chennai. Yesterday, Mines Minister Sis Ram Ola had also said his ministry had no plans to divest stake in Nalco.

At today's closing price of Rs 222.20 on the National Stock Exchange, 10 per cent stake sale in Nalco will fetch the government Rs 120.47 crore. Divestment of 10 per cent stake in Neyveli will fetch Rs 80.8 crore on the basis of today's closing price of Rs 56.65.

In case these divestment plans go through, the proceeds will go into the National Investment Fund, and not be used to cut government's fiscal deficit.

The fund, announced in the Union Budget for the year ended March, will use returns from the corpus for social sector projects and partly to meet capital investment needs of profitable public sector units. So far, however, the National Investment Fund has been a non-starter.

The Cabinet Committee on Pricing is likely to meet tomorrow to take up the issue of soaring commodity prices, a senior government official said today. The CCP is expected to recommend higher imports, particularly of pulses, a senior government official said today.