Government set for $4 bln Coal India sale to help hit deficit target

MUMBAI (Reuters) - The government is set to sell a stake of up to 10 percent in state-owned miner Coal India on Friday as it seeks to reignite an asset sale programme critical to the pledge to hit fiscal deficit targets by the end of March.

The Coal India stake, worth about $3.9 billion at current market prices, will be sold through an auction on stock exchanges, the government said in a statement on Wednesday. It currently owns close to 90 percent of the mining company.

With barely two months until the end of the financial year India has managed to raise a little more than $300 million from assets sales, against an ambitious target of $10 billion to keep the fiscal deficit at 4.1 percent of gross domestic product.

The Coal India disposal, if successful, will cover more than a third of the total asset sales target.

The government is also banking on the sale of a 5 percent stake in energy explorer Oil and Natural Gas Corp , worth $2.5 billion. The sale is scheduled for before the end of the financial year, the oil minister said on Wednesday.

Friday's sale will include at least 315.8 million shares in Coal India, with an option to sell 315.8 million more, the statement said. A floor price for the auction will be set on Thursday.

Last week the government invited bids from merchant bankers to sell a 10 percent stake in miner NMDC . Among others, the government is also planning to sell 5 percent each in Power Finance Corporation (PFC), Dredging Corporation of India and Bharat Heavy Electricals .

(Reporting by Devidutta Tripathy; Editing by Clara Ferreira Marques and David Goodman)