Plan underway to sell 10% of Coal India Ltd

New Delhi: India's government plans to sell a 10 per cent stake in Coal India Ltd., the nation's monopoly producer of the fuel, as part of a record sell-off of assets to fund infrastructure and social welfare programmes.

A decision on the timing of the sale in the unlisted company will be taken by August, Chairman Partha S. Bhattacharyya said in an interview on the sidelines of a conference in New Delhi yesterday. He didn't give financial details.

India can sell stakes in as many as 60 state-run companies, including Steel Authority of India Ltd. and Bharat Sanchar Nigam Ltd., the finance ministry said in November.

Prime Minister Manmohan Singh's government is accelerating asset sales to take advantage of an 81 per cent advance in the country's stock market in 2009, the biggest rise in 18 years.

Push on shares

"The government's push on share sales is partly to ease the fiscal burden and help in fiscal consolidation," Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd., the local unit of Standard & Poor's, said.

"The market has been helpful and any share sale is seen as a positive step."

India may sell as much as Rs250 billion (Dh19.86 billion) of shares in state-run companies this fiscal year ending March 31, more than half the total raised since privatisation efforts began in 1991, Sunil Mitra, the secretary in the Department of Disinvestment, said on January 19.

NMDC Ltd., the nation's largest iron-ore producer, and NTPC Ltd., the biggest electricity provider, are among companies in which the government is selling stakes, according to documents filed with the regulator.

Plugging deficits

The sales will help plug a budget deficit that may widen to the equivalent of 6.8 per cent of gross domestic product this financial year, the highest level in 16 years.

The federal government, which owns 89.5 per cent of NTPC, will start the sale of a five per cent stake on February 3 and could raise more than $2 billion (Dh7.35 billion), according to JPMorgan Chase & Co., one of the banks helping to manage the sale.

NMDC may sell shares between March 9 and March 12.

The Bombay Stock Exchange's BSE-PSU Index of 48 state-owned stocks climbed 81 per cent in 2009 after Prime Minister Manmohan Singh's Congress party won a second five-year term in May without the support of communist parties, which had stalled previous initiatives to sell state-owned assets.