PM writes to Jayalalithaa on NLC disinvestment

The Prime Minister, Dr. Manmohan Singh, has written to Tamil Nadu Chief Minister J. Jayalalithaa, to inform her about the central government's move to disinvest a further five per cent of its equity in the Neyveli Lignite Corporation (NLC).

Referring to Jayalalithaa's letter of July 7 on the issue, Dr. Singh said disinvestment in NLC is needed for compliance with the minimum public shareholding requirement under the Securities Contract (Regulation) Rules, 1957.

"The proposed five per cent disinvestment will neither lead to privatization nor will it alter the public sector character of the company. At present, the Government of India's shareholding is 93.56 per cent and the remaining 6.44 per cent shares are held by others. After a further dilution of equity by five per cent, the shareholding of Government of India will be 88.56 per cent." The prime Minister said in his letter to the Tamil Nadu chief minister.

"The public sector character of the company will not be affected at all as long as the Government of India continues to hold more than 51 per cent of the shareholding in NLC. The fear that such a disinvestment would lead to privatization is, therefore, unfounded and devoid of facts," he added.

He further said that the Tamil Nadu Government's suggestion that Tamil Nadu state public sector undertakings purchase five per cent out of Government of India's shareholding in NLC had been discussed with the Securities and Exchange Board of India (SEBI), which informed that the possibility exists for a state industrial development corporation to participate in an institutional placement programme, possibly with some preference.

He requested the state government to nominate a senior officer to coordinate with the Department of Disinvestment and SEBI so that the Centre can comply with the relevant rules before 8 August, 2013, and give final shape to the proposed NLC disinvestment process.

He said that this was the need of the hour, as the aim was to work towards resumption of normal power generation by NLC, so that the southern region, including Tamil Nadu, does not suffer on account of power shortages.