To focus on IPOs considering mkt situation: Divestment secy

The government may not miss its divestment targets this year. In an interview to CNBC-TV18, Mohammed Halem Khan, divestment secretary said that the government will focus on IPOs considering the market situation.

He informed that Nuclear Power Corporation and RINL IPO may see the light of the day soon. Also, pending follow-on-offer (FPOs) of BHEL, SAIL, OIL, Neyveli Lignite, NALCO, HZL, BALCO and Hindustan Copper may get hit the market in FY13. Khan also hinted at a 10% divestment plan in SAIL.
Against a Rs 40,000-crore disinvestment target, the government has been able to raise just Rs 14,000 crore in the FY12 through the listing of Power Finance Corp (Rs 1,145 crore) and follow-on offer of ONGC (Rs 12,776 crore) while follow on issues of SAIL, BHEL and Oil India Ltd had to be held back due to adverse market conditions.
Since 1992, when the government started its divestment process, missed the target  11 times.
"For FPOs, we already have a large number of authorisations including  BHEL, Oil India and SAIL. As far as the inter-ministerial consultation is concerned, that process is at a fairly advance stage. So there almost half-a-dozes PSUs at different stages in the divestment pipeline awaiting a conducive market for faster sale," says Khan. 
The divestment in BHEL already has Cabinet approval, but then the PSU withdrew its draft red herring prospectus and the power ministry said that that it was keen to pursue the divestment.
Explains Khan, "For BHEL, it is only a question of pricing. I really don't find anything wrong in their line of thinking. The only question remains: How long you can wait? If it is in a reasonable timeframe then probably the divestment can wait. Otherwise, one will have to take a call and initiate the disinvestment process."
A residual stake sale in PSUs like Hindustan Zinc, BALCO and Tata Comm is also on the cards. The government has received an offer from Vedanta and the EGoM is still to meet.
On the government's decision to negotiate at the price Vedanta quoted, Haleem Khan said, "Ultimately the decision-making authority lies with the EGoM. Till there is clarity and a clear mandate is issued to negotiate, we have to continue with the arbitration process."
"As you know the BALCO arbitration is complete and has gone in favour of the government while the arbitration with Hindustan Zinc is on."
The secretary also added that there was no reason why the disinvestment target could not be achieved during this financial year.
The department of disinvestment is also working on an ETF fund for PSUs. Haleem Khan explains the rationale behind the tracker fund. "In these market conditions, most of the shares in PSUs or private companies are selling at 40-50% of their historical highs. If we further improve the supply of those scrips in the market, then the extra scrips will face price-pressures."
"To save the wealth of the existing shareholders, this fund will serve two purposes - the shareholders will not be impacted because the extra supply will go into a different format and the government will be able to disinvest at the current price."