New Delhi, Nov.14 (ANI): A five percent stake sale of the state-run power producer National Thermal Power Corporation (NTPC) could fetch the government 1.8 billion dollars (81 billion rupees), Disinvestment Secretary Sunil Mitra said on Friday.
Last week, the government mandated more sales of shares by state firms and changed the rules on how it can use the proceeds, as it seeks to boost revenues and rein in a widening budget deficit.
The five percent stake sale in NTPC could fetch the government more than three times the 27 billion rupees it got five years ago when it offloaded 5.25 percent of shares, Mitra said.
"Now, after the recent cabinet approval, we are going...to five percent stake in NTPC. We would be offloading this through offer for sale. The expected value that we, that we anticipate in this five percent public offering is more than three times we got near five years ago. That is because that enterprise value has gone up substantially," Mitra told the media here.
Last week, the cabinet approved a long-pending divestment policy that mandates at least 10 percent public holding in state-run firms and use the proceeds for social schemes until March 2012, to cut its fiscal deficit.
Since August, share sales in two state firms-NHPC and Oil India raised about 1.8 billion dollars.
Last month, the cabinet approved share sales for NTPC, Satluj Jal Vidyut Nigam and Rural Electrification Corp.
India aims to sell shares of about 60 state-run firms in the coming years, with offers for NTPC and Rural Electrification Corp expected by end-March 2010.
The finance ministry is in talks with other ministries to launch public offers for Steel Authority of India, miner NMDC, Coal India Ltd and telecoms firm BSNL.
Analysts said it might not boost sentiments as appetite may be lacking for follow-on offers of listed firms unless shares are offered at a discount, but would help cut fiscal deficit.
Investors were expecting faster progress in stake sales along with reforms in insurance and banking sectors after the Congress Party-led coalition was re-elected with a stronger majority at the April/May general elections.
Scanty rainfall and floods briefly shifted policy focus to taming food price inflation in the last two months, but ministers have said recently reforms would be speeded up and more state-run firms would be taken up for stake sales.
India's fiscal deficit is set to widen to 6.8 percent of gross domestic product in fiscal year 2009/10, from 6.2 percent a year ago, on duty cuts and stimulus spending. (ANI)