A discussion on disinvestment of government stake in two state-owned entities--Coal India Ltd and Hindustan Copper -- was deferred on Thursday, although the issue was on the Cabinet agenda.
However, no timeframe has been set by the Cabinet to take up these issues.
Top sources in the government told Business Standard that Railway Minister and Trinamool Congress chief Mamata Banerjee's opposition to divestment plans of profit-making public sector entities prompted the Cabinet not to take it up for discussion on Thursday.
If a decision was taken in this regard, CIL's proposed initial public offer of Rs 13,000 crore (Rs 130 billion), in the last week of July, would have overtaken Reliance Power's Rs 11,560 crore (Rs 115.6 billion) offering in January 2008 as India's biggest. Hindustan Copper had proposed to raise Rs 2,000 crore (Rs 20 billion) through divestment of 10 per cent government stake.
Banerjee, back in Delhi after recording a thumping victory in the civic polls in West Bengal, attended the meeting -- her first since the election results were announced.
Banerjee had earlier registered her protest against the disinvestment of profit-making government units--especially Coal India--with the top leadership of the governing United Progressive Alliance.
She reportedly met Finance Minister Pranab Mukherjee on Wednesday night, officially to discuss an alliance with the Congress Party for the upcoming assembly by-polls in the state.
According to sources, when the Hindustan Copper disinvestment issue came up for discussion today, Mukherjee told the Cabinet the two issues regarding divestment would be discussed later.
B K Handique, minister for mines--the nodal ministry for Hindustan Copper--confirmed the two issues were not discussed but gave no reason for the move.
Banerjee later said: "The issue (of Coal India disinvestment) was not discussed. When it comes up, I will express my opinion in the Cabinet. I will not discuss this with the media."
The Manmohan Singh government has planned to divest at least 10 per cent stake in Coal India, the world's largest coal miner, through the IPO. Although the finance ministry's proposal says a large chunk of these shares will be sold to the employees of Coal India at a 5 per cent discount, Banerjee remains unconvinced.
To fast-track the issue, CIL had informally shortlisted six merchant bankers.
The Cabinet had recently allowed the disinvestment ministry to carry on the process of appointment of merchant bankers and book running lead managers even without its approval.
This was done to avoid delay and crowding of public issues in the last quarter of the financial year.
Bankers, however, said postponement of the IPO at this point could be a blessing in disguise as fund managers across Europe and the US would be reluctant to allocate money because of the difficult market situation.
"But, the decision not to clear the IPO is curious as the government could have decided on the timing of the IPO even after the Cabinet's clearance," said a banker.
The government had earlier proposed to sell its stake in 10 public sector companies, including MMTC, Coal India Ltd, SAIL, RINL and Shipping Corporation, in the current financial year.
The government had raised Rs 25,000 crore (Rs 250 billion) through stake sale in PSUs like Oil India, NMDC, REC and NTPC, in the last financial year.
Banerjee is banking on private investment to implement several new schemes and projects of the Indian Railways but she is a known and vocal critic of disinvestment. While laying out her plans for public-private-partnership schemes, she had said emphatically that Railway assets will not be disinvested.
A minister present in the Cabinet meeting said: "Banerjee has not objected to the Hindustan Copper sell-off so far, but she had conveyed her opposition to Coal India disinvestment a few weeks ago. May be the finance minister didn't want to take any risks and deferred both issues today."
Image: Mamata Banerjee
