Tamil Nadu government’s offer to buy 5 per cent stake in Neyveli Lignite Corporation has been referred to Sebi, said Coal Minister Sriprakash Jaiswal on Tuesday while asking trade unions of the PSU firm not to go on strike against the proposed share sale in the company.
“The suggestion of Chief Minister of Tamil Nadu regarding divestment of shares of NLC through special arrangements to the Undertakings of Government of Tamil Nadu has been referred to SEBI for examination whether such sale is permitted within the Securities Contracts (Regulation) Rules, 1957,” Mr. Jaiswal said.
The Minister appealed to the trade unions not to resort to any strike stating that “suggestions of Chief Minister of Tamil Nadu are under examination of the Government of India.
Finance Minister P Chidambaram had on Monday said that the Centre will consider the offer of the Tamil Nadu government to buy shares of the proposed disinvestment of public sector Neyevli Lignite Corporation (NLC).
Chidambaram had said that he had read about TN government’s offer in the newspapers and has not seen the letter written by Chief Minister J Jayalalithaa.
“The letter, I believe, is addressed to the Prime Minister. The copy of the letter has not come to me but assuming that is what the letter says, I will ask the Capital Markets division to quickly consult Sebi whether that would amount to compliance with the Sebi regulations,” he said.
He was responding to a question on whether the Centre would consider Jayalalithaa’s offer to buy central government’s five per cent stake in the lignite producer, which the government had offered to offload to meet Sebi’s listing norms.
The state-run company had last week said its recognised and registered unions have threatened to go on indefinite strike against the decision.
The Tamil Nadu headquartered firm is facing stiff protests over the disinvestment decision and 17 trade unions representing its 17,000 employees have already announced they would go on indefinite strike from the midnight of July three till the decision of disinvestment is withdrawn.
The Cabinet had last month cleared sale of 7.8 crore share, or 5 per cent of government’s stake through an offer of sale in NLC to raise around Rs. 466 crore at current prices.
Ms. Jayalalithaa had asked the Centre to reconsider the decision to disinvest shares in NLC and wrote to Prime Minister Manmohan Singh saying such a move would lead to labour unrest and disruption of power supply from Neyveli.
SEBI has set a deadline of August 2013 for all listed central public sector units to have a minimum 10 per cent public shareholding.
Ms. Jayalalithaa had suggested delisting of Neyveli Lignite or amending the Securities Contracts (Regulation) Rules, 1957, to make a special exemption for the company from the minimum public shareholding rule.