Govt's disinvestment problems persist

The extension of the deadline for bids for the selection of merchant bankers and brokers for the Metals and Minerals Trading Corporation of India (MMTC) offer for sale (OFS) thrice in a month indicates meeting the Rs 30,000-crore disinvestment target for 2012-13 would be an uphill task for the government. Earlier, the Rashtriya Ispat Nigam Limited (RINL) initial public offering (IPO) had also been deferred thrice, indicating hurdles on the disinvestment front.

Earlier, the disinvestment department had fixed September 28 as the first cut-off date for of bids by merchant bankers and brokers for handling the OFS. Subsequently, it extended the deadline to October 12, October 23 and now, to October 31 — all in a month. Finance ministry officials said for both RINL and MMTC, pricing was a major concern, owing to which merchant bankers and brokers were wary of taking up the issues.

So far, the government has failed to make a headway on the disinvestment front, despite Finance Minister P Chidambaram stressing the target for this financial year would be achieved.

Of its shareholding of 99.33 per cent in MMTC, the government is considering disinvesting 9.33 per cent paid-up equity share capital, comprising 9.3 million shares of face value Rs 1 each, in the domestic market, through an OFS. This is likely to fetch the government about Rs 7,000 crore.

The government’s list of companies in which the process of stake sale through an OFS has already been initiated by the disinvestment department includes Oil India, Nalco and NMDC.