New Delhi, July 11 (IANS) Government proposes to further loosen its control over the coal sector by by further diluting its stake in the public sector coal major Coal India Ltd (CIL).
Government sources said that upto 15 per cent government stake in CIL may be sold under the offer for sale route (OFS) this year to mobilise close to Rs 12,000 crore as disinvestment proceed at current share price on bourses.
However, if extension of COVID-19 pandemic created lacklustre market conditions happens the government may ask CIL to buyback its shares at fair valuation.
Government is looking to loosen its grip in CIL as it is carrying forward major reforms in the coal sector by opening it up to competition from the private sector who will now be given the right to commercially extract coal. In this environment, government wants CIL to become a more professionally run company with limited government presence.
Government currently holds 66.13 per cent stake in CIL. If the plan for sale of 15 per cent government equity goes through, then the Centre''s holding in the company will come down to just about 51 per cent while the equity sale will make it richer by over Rs 12,000 crore.
CIL previously sold 10 per cent of its shares in January 2015 and raised Rs 22.550 crore. But with coal prices falling across the globe in the absence of any pickup in demand, the company''s share prices has also fallen and make key capitalisation reduced.
The COVID-19 pandemic has disturbed the government''s disinvestment plan even in FY21. A very ambitious disinvestment target of Rs 2.01 lakh crore has been set for current year. But with the plan hardly making any progress in the first quarter of current fiscal and things still looking difficult, achieving the target looks difficult.
As a result, government is preparing a list of cash-rich PSUs with big reserves that can be put into action for meeting government''s disinvestment target. If market sale of government shares becomes difficult in current environment then these companies may be asked to use their respective reserves to buy back government shares.