CCEA nod to 3 power PSUs' IPO

Three state owned companies - Power Grid Corporation, Power Finance Corporation and Rural Electrification Corporation - will approach the markets to raise capital through initial public offers (IPOs) in the last quarter of the current financial year.

This was approved at the meeting of the Cabinet Committee on Economic Affairs (CCEA) here today.

Power Grid's public issue will not exceed 24 per cent of its paid up capital in tranches, with the first for 10 per cent.

In the case of Power Finance Corporation, the company will issue 11.73 crore equity shares, corresponding to 10.22 per cent of its post issue capital.

Rural Electrification Corporation will issue 15.6 crore equity shares, corresponding to 20 per cent of its current paid up capital.

The CCEA also approved the special accelerated road programme for building 603 km of national highway in the North East.

It also approved the Budget 2006 announcement for farmers to get loans of up to Rs 3 lakh at 7 per cent interest from public sector banks, NABARD, regional rural banks and cooperative banks at a total cost of Rs 1,955 crore.

Briefing the media after the CCEA meeting, Finance Minister P Chidambaram said: "The IPOs are being issued to raise fresh capital by issuing fresh shares. The power ministry will decide the timing, but the issues will probably happen in the fourth quarter of the current financial year. The inter-ministerial group will decide the price band."

Chidambaram clarified that the government is diluting its stake in the companies and not disinvestment.The CCEA also cleared the DLF-Hilton joint venture and two big-time realty funds envisaging a total foreign investment of Rs 4,853 crore.

US-based Hilton International Company will invest in a joint venture with domestic real estate major DLF, with the foreign investment in the joint venture at Rs 643 crore. DLF would hold 74 per cent in the JV while Hilton would have 26 per cent.

Hilton has also been permitted to set up a wholly-owned subsidiary in India for operation and management of hotels. The investment inflow would be Rs 130 crore.

"Since the foreign investment exceeded Rs 600 crore, the FIPB sent the proposal for CCEA clearance," Chidambaram added.

The CCEA also approved a proposal of Mumbai-based Peninsula Realty Fund to permit overseas investors to invest, through a special purpose company, in units to be issued by a scheme.

This money would be invested in an FDI-compliant project of Peninsula Realty Fund, bringing in foreign investment of about Rs 1,596 crore.

In addition, CCEA also cleared a proposal of Urban Infrastructure Venture Capital to raise up to Rs 2,070 crore from NRIs and other foreign investors into Urban Infrastructure Opportunities Fund with a greenshoe option of Rs 414 crore. The total inflow of foreign investment would be up to Rs 2,484 crore.

It also approved the financial restructuring of the Nagaland Pulp and Paper Company in Nagaland for revival.

Meanwhile, the Union Cabinet approved the amendment of the National Rural Employment Guarantee Act, 2005 so that it can be extended to Jammu and Kashmir.

Other approvals include the signing of a protocol to amend the air services agreement between India and Switzerland for aviation security and safety, action taken memorandum on the national minority report, allowing Sikh passengers to carry 'kirpans' whose size of the blade is not more than six inches and length less than nine inches in domestic flights and approval of the protocol for amending agreements between India and Romania for the promotion and reciprocal protection of investments.