The decks were cleared on Monday for the Tamil Nadu government to acquire the five per cent stake proposed to be divested in Neyveli Lignite Corporation (NLC), a move ending the month-long stalemate over the process and protests by the central PSU workforce.
The way for the State to purchase the shares was paved following discussions in Mumbai among officials from Tamil Nadu, led by K. Shanmugam, Principal Secretary (Finance), and those of the Centre and Securities and Exchange Board of India (SEBI).
Announcing this, Chief Minister Jayalalithaa, in a statement, said five State PSUs, whose eligibility was discussed earlier at a meeting in New Delhi last week, would be buying the five per cent stake to be shed by the Centre in the ‘Navaratna’ PSU. It would be a Rs.500-crore deal. She described the development as a major victory for her government, the NLC workers and people of Tamil Nadu.
While agreeing to her suggestion for divesting the stake in favour of the State PSUs, the Centre, however, struck to its position of offloading five per cent in NLC. Ms.Jayalalithaa had, in one of her letters on the issue to Prime Minister Manmohan Singh, pointed out that since public holding in NLC was already 6.44 per cent, it would be sufficient if 3.56 per cent was divested.
The disinvestment, construed by political parties in the State, including Dravida Munnetra Kazhagam, an erstwhile ally of the Congress, and workforce of the central PSUs as a privatisation move, was necessitated by the minimum public holding norms. Dr. Singh had cited the Securities Contract (Regulation) Rules, 1957, in this regard and underscored the need to comply with them by August 8. While the minimum public shareholding norm for private firms is 25 per cent, for PSUs it is 10 per cent.
At the meeting last week, the State government proposed that the Tamil Nadu Industrial Development Corporation (TIDCO) be given 25 per cent of the NLC stake to be offloaded; State Industries Promotion Corporation of Tamil Nadu (SIPCOT) 45 per cent; Tamil Nadu Industrial Investment Corporation (TIIC), Power Finance & Infrastructure Development Corporation Ltd (Powerfin) and Tamil Nadu Urban Finance & Infrastructure Development Corporation Ltd (TUFIDCO) 10 per cent each.
Ms.Jayalalithaa said the State government team had suggested at the meeting that the share sale price be arrived at taking into consideration the average price at which the NLC scrip was traded in the last two weeks.