Cabinet nod to SAIL divestment

The Cabinet Committee on Economic Affairs (CCEA) today approved disinvestment in Steel Authority of India Ltd (SAIL) to mop up an estimated Rs 16,000 crore.

This is in line with the government’s disinvestment plan to raise Rs 40,000 crore in 2010-11 and will be followed by disinvestment in other public-sector undertakings (PSUs) like Coal India Ltd, MMTC and Engineers India.

As part of the proposal, SAIL will raise an additional 10 per cent of the paid-up equity and the government on its part will disinvest 10 per cent of its holding in the PSU. “This will be done in two tranches. In each tranche, there will a 5 per cent follow-on public offer (FPO) and five per cent sale of the government equity,” Home Minister P Chidambaram said after the CCEA meeting.

As a result, after both tranches are completed, the government’s shareholding in SAIL will come down to 69 per cent, from 85.6 per cent at present, and public shareholding will rise to 31 per cent, from 14.2 per cent.

At current prices, it is expected that SAIL will get an additional capital of Rs 8,000 crore, while the government will get an equal amount. The proceeds from fresh issues of equity by SAIL will help in filling the resource gap for funding the steel Navratna’s capital expenditure emerging from increased pressure on steel prices and diminished margins.

SAIL is undertaking a Rs 70,000-crore expansion programme to raise its installed production capacity from 13.82 million tonnes per annum (mtpa) to 23.46 mtpa.

Himachal’s stake in SJVNL
CCEA has also approved the enhancement of equity stake of the Himachal Pradesh government in Satluj Jal Vidyut Nigam Ltd (SJVNL) from 25 per cent to 25.5 per cent. This is following the government’s decision in October last year of disinvesting 10 per cent paid-up equity in SJVNL out of Centre’s holding of 75 per cent.

The government is banking on proceeds from stake sales to meet its fiscal deficit target of 5.5 per cent of gross domestic product for 2010-11. Last year, the government had divested stake in NTPC, Oil India and NMDC and raised Rs 25,000 crore.

OTHER DECISIONS

# HIGHWAY PROJECTS: The government approved highway construction works worth over Rs 4,355 crore in various states, including Bihar and Rajasthan. Four-laning of Beawar-Pali section and Pali-Pindwara section of NH 14 in Rajasthan, at an estimated cost of Rs 1,102.10 crore and Rs 1,326.54 crore, respectively, was approved

# DIGITISATION OF DD, AIR: The Rs 1,540-crore digitisation programme of the Ministry of Information and Broadcasting for state-owned broadcasters — Doordarshan and All India Radio (AIR) — in the 11th Plan, to help meet challenges posed by private operators was approved by the Cabinet Committee on Infrastructure

BLIL board reconstitution
CCEA approved the reconstitution of the board of Balmer Lawrie Investment Ltd (BLIL), following the transfer of administrative control of BLIL to the ministry of petroleum and natural gas. The reconstituted board will have five directors. While the director (finance) of Balmer Lawrie & Company Ltd (BL) will be the ex-officio director (finance) of BLIL, there will be two directors nominated by the petroleum ministry and two independent non-official directors appointed by the central government.

At present, the board of BLIL consists of three non-executive directors nominated by the government and two independent directors.