PSU disinvestment only in favourable market conditions: Pranab

The government will hit the market with disinvestment of its PSUs only when conditions are favourable and good money could be raised,Finance Minister Pranab Mukherjee has said.

“… as and when I find the market is favourable and I can get good money,then I will go for disinvestment. I am not going to list out the number of PSUs (for disinvestment),indicating their percentage of share that would be offloaded in the market,over which period of time. These things we are not going to tell,” he said.

“I do not know whether the PSUs were over crowding the market. Whatever we are offering (is) to the public at large. OIL (Oil India Limited) has been subscribed to by a large number of PSUs and the same is (true for) the NHPC”,Mukherjee said when asked whether the spate of disinvestment could overcrowd the markets.

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At the same time he debunked suggestions that pricing of public offers so far during the current financial year was aggressive and led to these shares not getting a good response in the secondary market.

The government recently offloaded its shares in the Oil India Limited (OIL) and NHPC and proposes to divest equity in another power major NTPC and Sutluj Jal Vidyut Nigam

Defending the government’s decision about pricing the shares of NHPC and OIL at the time of public issues,Mukherjee said,”so far the pricing is concerned,we go by the advise of the consultants.

“And not one consultant,various consultants are consulted,their opinions are sought and after details discussions with the administrative ministries,the Cabinet Committee on Disinvestment takes decisions”,he added.

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As part of the disinvestment exercise,the hydel power major NHPC came out with a public issuing offering shares at Rs 36,but soon after the share price slipped below the offer price causing loss to investors. Its shares were being traded at Rs 32 at Bombay Stock Exchange last week.

OIL,however,managed some positive response from investors as its shares being traded at a premium at Rs 1,164,above the offer price of Rs 1,050 per share.

These developments,especially with regard to NHPC shares,evoked sharp criticism from market analysts who felt that government was pricing the shares of its PSUs very aggressively.

Mukherjee said the government will take a decision on timing of offloading and pricing of shares of NTPC and SJVN after watching the market conditions.

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The government had decided to offload 5 per cent shares of NTPC and and 10 per cent of SJVN.

On proceeds of disinvestment bridging the fiscal deficit,he said,”I have not taken into account any credit of these disinvestment proceeds… I am not indulging in that or what would be the quantification (or) what we would like to raise,because that would have market distortion.”

The fiscal deficit is slated to soar to 6.8 per cent of the Gross Domestic Product (GDP) in the current fiscal from 6.2 per cent during 2008-09 on account of various stimulus packages provided by the government to boost the economy reeling under the impact of the global financial meltdown.

Under the current dispensation,the disinvestment proceeds go to the National Investment Fund (NIF) and the funds are used for social sector like health and education.