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ENS ECONOMIC BUREAU
NEW DELHI, JAN 7: The government is confident of mopping up about Rs 8,000 crore through the various options of disinvestment that it is exploring at present, top government sources disclosed on Thursday. This would be well above the disinvestment target of Rs 5,000 crore for 1998-99.
The government is hopeful that inter-company sale of equity in the three energy companies -- Oil and Natural Gas Commission (ONGC), Indian Oil Corporation (IOC) and Gas Authority of India Ltd (GAIL) -- will yield about Rs 6,500 crore. And at least Rs 1,500 crore can be realised from having Videsh Sanchar Nigam Ltd (VSNL), Mahanagar Telephone Nigam Ltd and National Aluminium Co (Nalco) buying back their equity from the government. Through the route of inter-company equity sale, IOC and ONGC will buy 10 per cent of each other's equity from the government. And both will buy five per cent of GAIL's equity from the government. Also, GAIL will reciprocate by buying two per cent of ONGC's equity from the government.
The petroleumand finance ministries are expected to move a composite paper jointly for Cabinet's approval for securing inter-company holdings and buyback of equity from the company. The government does not foresee any problems as a result of the cross holding in the energy companies. ONGC, IOC and GAIL are not exactly competitors and exchange of directors as a result of the cross holdings will not lead to any bad blood, a government official said.
Earlier, the government was hopeful of getting the cash rich oil companies and the two communications companies -- VSNL and MTNL -- to buy back a substantial amount of their equity from the government. But later, the government realised on a closer scrutiny of figures that if these companies extinguish a large part of their equity through buyback their financials can get jeopardised. The financial institutions are expected to lend a hand in the disinvestment exercise by warehousing a large number of shares of companies which are on the block. Warehousing will result in thegovernment parking its holdings in these companies with the FIs which in turn will give a discounted price to the government. Critics of the government remark that warehousing is nothing but raising a loan by the government by pledging its shares to FIs.
This roundabout route of disinvestment is labelled as an apology for disinvestment as it will lead to a wider holding of these companies.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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