Govt clears the way for 5% stake sale in NTPC

ALSO ON SALE 10% IN SJVN Divestment Move May Add Rs 9,000 Cr To Kitty A CABINET committee on Monday approved the sale of 5% in NTPC in one of the most ambitious equity sales in a state-owned firm that could fetch the government around Rs 9,000 crore at current market prices.      The divestment in the country's largest power generation company, which is valued at around Rs 1,80,000 crore at Friday's closing price of Rs 213 a share on NSE, will be carried out through a follow-on offer. The government owns 89.50% in the company.      The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Manmohan Singh also allowed Norwegian firm Telenor to hike its stake in Unitech Wireless up to 74% and cleared the sale of 10% government stake in profit-making Satluj Jal Vidyut Nigam (SJVN).      SJVN is a 75:25 joint venture between the Centre and the Himachal Pradesh government. The exact timing of the offer has not been specified.      "On divestment of the proposed equity, it is expected that the market capitalisation of NTPC would be much higher and help the company to raise resources in the international market on competitive terms," commerce and industry minister Anand Sharma told reporters after the CCEA meeting.      The equity dilution is unlikely to weigh on the company's share. In fact, Naresh Kothari, president of Edelweiss Securities, sees the divestment as a positive sign. "It is a positive sign for the company, suggesting that the government is open to reducing stake to 51% in stages and give more autonomy to PSUs," Mr Kothari said.      The large global size offering will attract quality overseas investors, apart from allowing more local investors to invest in the company, he added. 'Govt should try mobilising Rs 25k cr via disinvestment'  MR SHARMA said post-divestment, while the Centre's shareholding in SJVN would come down to 65%, the stake of Himachal Pradesh government company would remain at the current level of 25%.      Faced with a 16-year high fiscal deficit of 6.8% in 2009-10, the government is expected to fast track the disinvestment process to mobilise resources. The economic survey released earlier this year had suggested that the government should look at mobilising close to Rs 25,000 crore on a yearly basis through disinvestment.      Telenor will invest Rs 3,740 crore in the Indian wireless service provider Unitech to hold 67.5% stake in the company, which is slated to roll out pan-India operations by the year-end under UniNor brand. The government has also approved a proposal of ECIL to invest Rs 370 crore for installing integrated security systems (ISS) for the Commonwealth Games next year. The CCEA also gave its approval to the commerce ministry's proposal to release wholesale price inflation data on a monthly basis, with a wider and updated basket of products and a more recent base year.