The Union Cabinet on Monday gave its nod to disinvestment in two power utilities — NTPC and Satluj Jal Vidyut Nigam Limited (SJVNL) — as part of its promise to unlock value and increase public ownership of national assets.

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Manmohan Singh, on Monday gave its approval to five percentage point stake sale in NTPC and 10 percentage point in SJVNL. “CCEA has given its approval to 10 percentage point disinvestment in SJVNL out of the Government’s share of 75 per cent and five percentage point divestment of Centre’s 89.5 stake in NTPC,” Union Commerce and Industry Minister Anand Sharma told journalists after the meeting.

After the stake dilution, the government’s holding in NTPC would come down to 84.5 per cent from 89.5 per cent. To make it inclusive and participatory, part of the shares would be offered to employees of the state-run firms,” Mr. Sharma said.

Under the current market conditions, the company would be able to mop up Rs. 8,500 crore through the stake sale. NTPC’s market capitalisation stands at Rs. 1,77,350 crore. The instrument through which the stake sale would take place will be decided later. It could either be through a follow-on public offer or through qualified institutional placement (QIP) of shares. The installed generation capacity of NTPC stands at over 30,000 MW and the company plans to raise this to 50,000 MW by 2017. The CCEA also approved offloading of 10 percentage points of the Centre’s 75 per cent stake in SJVNL, a 75:25 joint venture between the Centre and the Himachal Pradesh Government. After this disinvestment, Centre’s shareholding in the company would come down to 65 per cent and Himachal Pradesh government’s stake would remain same at 25 per cent. The paid-up equity capital of the company at present is Rs. 4,108.81 crore.

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