Govt disinvestment policy halts NTPC follow-on offer

The Finance Ministry said on Monday that it did not agree to the proposal of divestment of 4.75 per cent equity of NTPC, out of Government shareholding, through a follow-on public offer (FPO) as the company was a “Navratna” company and the present disinvestment policy does not envisage Government equity dilution in Navratnas.

“NTPC is a Navratna company. Since, the present policy does not envisage disinvestment by Government in a ‘Navratna’ company, the Ministry of Finance did not agree to the proposal,” a clarificatory release issued by the Finance Ministry said.

Last week, the Minister of State for Power, Mr Jairam Ramesh, had said that there was a proposal by NTPC to approach capital market through an FPO, but the Finance Ministry has rejected it.

After the FPO, government shareholding in NTPC would have come down to 84.75 per cent from 89.5 per cent. In 2004, NTPC had raised Rs 5,386 crore through an initial public offering (IPO) by way of fresh issue of shares and diluting Government’s stake.

The Power Ministry had approached the Department of Disinvestment in the Finance Ministry in August 2007 for approval of the FPO that could fetch the company nearly Rs 6,000 crore to part finance the expansion programme, reports The Hindu Business Line.