Govt okays sale of 10% in Nalco, Neyveli Lignite

Signalling its commitment to reforms, the United Progressive Alliance government today cleared disinvestment of a minority stake in two profit-making non-navratna companies "" the National Aluminium Company Ltd (Nalco) and the Neyveli Lignite Corporation (NLC).

The Cabinet Committee on Economic Affairs gave its go-ahead for sale of a 10 per cent stake in each of the two companies through a book-building process.

The UPA government had earlier cleared sale of minority stakes in the National Thermal Power Corporation, the Power Finance Corporation, and the National Mineral Development Corporation.

Briefing reporters after the meeting, Finance Minister P Chidambaram said no time-frame had been fixed for off-loading government stake in the two public sector companies.

"The sell-off process will depend on the prevailing price and the advice of the lead managers. The government will choose the appropriate time. We will not rush it," he said.

The government's holding in NLC will be reduced to 83.56 per cent after the 10-per-cent stake sale, while its holding in Nalco will come down to 77.15 per cent.

The disinvestment proposal for Nalco also contains a clause for splitting the share before the offer for sale. The exact split ratio will be finalised by the department of disinvestment, in consultation with the ministry of mines, department of expenditure, and the department of heavy enterprises.

Asked if the Left parties had been consulted on the decision, Chidambaram said the government was sticking to the decision taken at its meeting with the Left parties on November 21, 2005, when it was decided that only a small portion of government equity would be sold in profit-making non-navratna enterprises, to raise resources for the National Investment Fund.

Chidambaram said the proceeds of the minority stake sale in both PSUs would go to the fund. Up to 75 per cent of the returns on the investment made by the corpus would be used to fund the social sector, while the remaining 25 per cent would be used to revive other PSUs.

The minister said even after the stake sale, the two companies would remain public sector units, with government holding exceeding 76 per cent in each.

With regard to Nalco, it was also decided that the department of disinvestment would be authorised to take a decision on the issue of bonus shares, in consultation with the Ministry of Mines, department of expenditure, and the department of public enterprises.

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Private wheat, sugar imports

The government today took steps to curb any inflationary impact of the spurt in foodgrain prices by allowing the private sector to import wheat, banning export of pulses with immediate effect, and permitting import of sugar under the tariff rate quota.

The measures were decided upon at a meeting of the Cabinet Committee on Prices, chaired by Prime Minister Manmohan Singh.