Cabinet to consider Neyveli Lignite stake sale tomorrow

The Cabinet Committee on Economic Affairs had earlier this month deferred a decision on the stake sale

The Cabinet is expected to take up tomorrow the proposal to sell government's 5% stake in Neyveli Lignite, which would help garner around Rs 450 crore to the exchequer.

The Cabinet Committee on Economic Affairs (CCEA) had earlier this month deferred a decision on the stake sale.

The Department of Disinvestment (DoD) has again moved the proposal for sale of over 7.8 crore shares, or 5%, through an offer for sale (OFS) in the Tamil Nadu-based miner.

Cabinet would consider "disinvestment of 5% paid up equity in Neyveli Lignite Corporation (NLC) out of Government's shareholding of 93.56% through OFS by promoters through stock exchange mechanism," said the draft CCEA note floated by DoD.

Shares of Neyveli Lignite today closed at Rs 57.80, down 3.26%, on the BSE. At the current market price, the stake sale could fetch around Rs 450 crore to the exchequer.

Tamil Nadu Chief Minister Jayalalithaa had last month written to Prime Minister Manmohan Singh, opposing disinvestment in the integrated mining-cum-power generating company.

She had said divestment in the company would lead to labour unrest and disruption of power supply from Neyveli.

The disinvestment department had communicated to the CCEA that there is no other option but to divest the stake in the company as it is the only way to make the company compliant with the minimum public shareholding norm.

SEBI has set a deadline of August 2013 for all listed central public sector units to have a minimum 10% public shareholding.

Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.