Millennium Post

Govt may start Coal India stake throwaway process after Diwali

'Coal India divestment process should begin immediately after Diwali,' Financial Markets Joint Secretary Manoj Joshi said on the sidelines of a capital market summit organised by industry body FICCI here on Wednesday. However, he quickly added that he is not from the divestment department.

The government plans to sell 10 per cent stake in Coal India Ltd (CIL), the world's largest coal producer. The government at present holds 89.65 per cent stake in CIL.

Shares of Coal India on Wednesday closed 0.30 per cent higher at Rs 341.35 on the BSE here. At current market price, 10 per cent stake should fetch around Rs 23,000 crore to the exchequer.

The Cabinet Committee on Economic Affairs (CCEA) last month had approved the disinvestment department's proposal to offload 10 per cent stake in CIL through offer for sale (OFS) route.
A successful CIL stake sale will help meet more than half of the total disinvestment target.

The divestment process would help the government contain its market borrowing target of Rs 5.97 trillion or maintain fiscal deficit at 4.1 per cent of the GDP.

To meet its fiscal deficit target, the government has identified four major public sector units to be divested, namely Coal India, Steel Authority of India (SAIL) as well as National Hydro Power Corporation (NHPC), which could fetch the exchequer a total of around Rs 46,000 crore, which would include Rs 18,000 crore expected from the divestment of Oil and Natural Gas Corporation (ONGC).

Buoyed by economic revival and tax collections, the government has likely stuck to its scheduled borrowing programme of Rs 2.3 trillion for the second half of the fiscal, so that it meets the 4.1 per cent fiscal deficit target.

The government has already appointed law firms for Power Finance Corporation (PFC), Rural Electrification Corporation (REC) stake sale, which could fetch around Rs 3,000 crore to the exchequer, while SAIL's disinvestment is expected to fetch the government more than Rs 1,700 crore for a 20 per cent stake.

The government had set a divestment target of Rs 40,000 crore in the previous fiscal, but could mobilise only Rs 15,820 crore.

The state-owned Coal India has been facing criticism for its failure to meet its mandataed commitments to power producers, forcing them to import costly coal from overseas.

In August, CIL badly missed its output target for the fourth month in a row, when it could mine merely 34.54 mt against the target of 35.13 mt. During the first five months of the current fiscal, it produced only 175.88 mt coal against its target of 183.44 mt.
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