Govt to divest 5% in Neyveli Lignite for Rs 700cr: Srcs

The cabinet committee on economic affairs is planning to divest 5 percent stake in state-owned Neyveli Lignite Corp via offer for sale for Rs 700 crore, reports CNBC-TV18 quoting sources.

The government currently holds more than 93% in Neyveli Lignite and the company’s divestment was scheduled for FY13, however government had to postpone due to adverse market conditions.

It must be noted that Tamil Nadu trade unions have been opposing the he lignite miners divestment. In fact Chief Minister Jayalalithaa has written a letter to Prime Minister Manmohan Singh saying that any proposal to disinvest even a small portion of the Neyveli Lignite shareholding would lead to “considerable labour unrest”.

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“Given the current acute power shortage in the State, any disruption of power supply from NLC would very adversely affect the interest of the state. Hence, I strongly urge you to explore (other) alternatives to the proposed investment,” she said.

Suggesting an option to avoid disinvestment of the power producer Jaylalitha said “NLC can be delisted by buying back the 6.44 percent currently in public hands through the buy back mechanism available under SEBI regulations. Alternatively, Securities Contracts (Regulation) Rules, 1957, can be amended to make a special exemption for NLC by introducing a necessary provision under Rule 19(2)(c),”

Observing that NLC is the largest public sector unit in Tamil Nadu, she said it was also the largest Central power producer located in a backward region of the state providing employment to more than 17,500 persons.

She urged Singh to take necessary action to ensure there was no further disinvestment or dilution of the share holding of the government of India in NLC.

(With inputs from PTI)