PFC disinvestment may be on the block this fiscal

The Power Ministry is mulling yet another big ticket follow-on offer of Power Finance Corporation to raise around Rs 6,300 crore by this fiscal end, even as the Finance Ministry has retained disinvestment target at Rs 40,000 crore this fiscal.

The issue will comprise divestment of five per cent stake held by the Centre along with 10 per cent issuance of fresh equity.

"It is being discussed...," Power Secretary P Uma Shankar told PTI, adding that fresh equity may be 10 per cent with five per cent government stake sale.

He added that the ministry is optimistic about bringing it (FPO) by the end of the current fiscal. "The proposal is on ...We hope to bring the offer by end of this (financial)year."

The power secretary's comments came amid speculations that the FPO of PFC may be deferred to next fiscal.

The follow-on offer of transmission utility PowerGrid Corp, which is under the administrative control of the Power Ministry, would open on November 9. The issue, which comprises 10 per cent divestment by the Centre and issuance of 10 per cent fresh equity, is expected to raise about Rs 8,400 crore.

Minister of State for Power Bharatsinh Solanki had informed Parliament in the last session that the board of Power Finance Corp has approved a proposal for a fresh issue of equity shares along with disinvestment, not exceeding in aggregate 20 per cent.

The government currently holds 89.78 per cent stake in the public sector company. It had divested 10 per cent stake through an initial public offer in 2007. After the proposed disinvestment it may go down to about 85 per cent.

Going by the current share price of PFC at Rs 366.50, the government and company may raise about Rs 6,300 crore.

PFC is a non-banking financial institution that provides loans for various power projects in generation, transmission, distribution sector as well as for renovation & modernisation (R&M) of existing power projects.

The government has divested its stake in various power PSUs over the last one year, starting with NHPC IPO in August 2009, followed by follow-on offers of NTPC and Rural Electrification Corp last fiscal (2009-10) and IPO of Satluj Jal Vidyut Nigam Ltd (SJVNL) in 2010-11.
    
The government has set a target of raising Rs 40,000 crore from disinvestment this fiscal against Rs 25,000 crore last fiscal. Despite raising Rs 15,200 crore from Coal India Ltd and some Rs 2,000 crore from other two offers, the Finance Ministry has said that it would stick to the target.