Indian Government Plans Disinvestment

Indian Government Plans Disinvestment in its various public sector companies by the end of year 2009. The Government plans to list only 2 state owned companies via disinvestments by the year end.

01) OIL – Oil India Limited

02) NHPC – National Hydroelectric Power Corporation

The Government plans to raise Rs.6,500 crore via these IPOs. The government will also dilute its holding in some companies where it holds more than 90% stake, which includes trading firms MMTC and State Trading Corporation of India (STC).

In all new listings of state-run companies, the government will sell its stake, rather than just issuing fresh capital.

While the money raised from fresh capital goes to the company, the proceeds from the government’s stake sale go to the centre, as was done in case of NTPC in year 2004.

The government also plans to take BSNL (Government owned telecomm company). The government expects the valuation of BSNL of over Rs.1 Lakh crore in the improved market.

In all new listings of state-run companies, the government will sell its stake, rather than just issue fresh capital.