Probe Neyveli purchase issue, DMK labour union urges Tamil Nadu

The DMK-backed Labour Progressive Front (LPF) Sunday urged the Tamil Nadu government to get all issues clarified on buying a five percent stake in Neyveli Lignite Corp (NLC) while reiterating its demand that the central government should scrap the divestment.

In a statement issued here, the LPF, citing the Securities and Exchange Board of India's (SEBI) regulations, said: "Even if a state government undertaking buys the five percent stake in NLC, it will not be accounted under the 10 percent public holding."

"The Tamil Nadu government or its officials should get things very clear so that the issue of disinvestment under the 10 percent public holding clause does not crop up in the future," LPF general secretary M. Shanmugam told IANS.

Meanwhile, in a statement, the union finance ministry said it has requested the Tamil Nadu government to nominate a senior official to discuss with SEBI matters connected with the acquisition of five percent of the central government's stake in NLC.

Tamil Nadu Chief Minister J. Jayalalithaa had earlier suggested that the state government undertakings are ready to buy the five percent stake through an institutional placement programme (IPP).

The ministry said it has discussed the matter with SEBI, which was of the view that the proposal could get covered within the guidelines on IPP.

"However, the exact details needs to be worked-out that require discussions with the officials of the government of Tamil Nadu, ministry of coal and department of disinvestment," the statement said.

"In the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of qualified institutional buyers including state undertakings of Tamil Nadu," it added.

According to Shanmugam, the central government had already divested five percent stake in favour of NLC workers and the Life Insurance Corporation of India (LIC) holds 1.44 percent.

He said it is clear the holdings of LIC is not taken into account while arriving at 10 percent public holding as the central government now wants to divest five percent stake.

The best solution for the problem is that the central government should scrap its idea of divesting its holdings in NLC, he asserted.