SENTHIL KUMAR: Neyveli Lignite Corporation (NLC)

Showing posts with label Neyveli Lignite Corporation (NLC). Show all posts

Tuesday, July 16, 2013

Kamaraj wish on NLC comes true

It may be just a coincidence, but one wish of former Chief Minister K. Kamaraj became a reality on his 110th birth anniversary (July 15, 2013) – the Central authorities agreeing to Chief Minister Jayalalithaa’s proposal of buying five per cent stake in the Neyveli Lignite Corporation (NLC). In May 1957, at a function to mark the inauguration of the Neyveli project, Kamaraj interjected while Prime Minister Jawaharlal Nehru was addressing the function, according to Congress leader A. Gopanna in his well-researched work in Tamil titled “Kamaraj – An Era” five years ago.

Kamaraj wanted to know whether the Centre would give a share in profits to the State government. Nehru replied that this issue would be taken up when the occasion arose. By then, the Union government had decided to implement the project as its own. This was why the query came from Kamaraj, whose record of remaining in office as Tamil Nadu Chief Minister for an unbroken spell of nine years (1954-1963) remains intact.

From the beginning, the Neyveli project, which owes its origins to a group of great men of integrity and commitment to the public well-being, including Kamaraj, was conceived as an integrated scheme of lignite mining and electricity generation. But, in the years immediately after Independence, power production was regarded in certain quarters as one of the functions of the States despite the subject ‘Electricity’ figuring in Concurrent List of the Constitution.

Prime Minister Mr. Jawaharlal Nehru taking a "watch-tower view" of the earth-moving operations at the integrated lignite project which he inaugurated on May 20, 1957 at Neyveli. At right is Mr. Kamaraj, the then Chief Minister of Tamil Nadu

It was against this backdrop that one had to view the Union Planning Commission’s opposition at that time to the Tamil Nadu government’s proposal that the Neyveli project be implemented as a Central scheme. While the Commission took the stand that the project was, in effect, meant for electricity production and the State government was free to execute it, the State’s position was that the project involved mining of a major mineral, which fell within the domain of the Centre.

The second-in-command of Kamaraj’s Cabinet, C. Subramaniam, had even walked out of a meeting with the Planning Commission authorities, as narrated in Subramaniam’s memoirs, “Hand of Destiny” – Volume I (page 310).

It was left to Kamaraj to prevail upon Nehru to agree to his government’s proposal. This was acknowledged by Nehru himself in the inaugural event of the Neyveli project. Over the last 56 years, Neyveli has become an important hub of power generation in the northern part of the State. Its three power plants can generate 2,490 MW and lignite mines 28.5 million tonnes per annum.

NLC issue and its behind politics

The AIADMK government scored a political victory as the stand-off over disinvestment in Neyveli Lignite Corporation ended and the unions called off their strike. In a move facilitated by the Centre, TN is now set to buy a 3.56% stake in NLC for Rs.500 crore and stall the entry of private investors.

In a first-of-its-kind transaction, the Centre and the Securities and Exchange Board of India made a departure from the normal divestment route and gave their nod to Tamil Nadu to acquire NLC shares through five state-run public sector undertakings.

Chief Minister J Jayalalithaa called Prime Minister Manmohan Singh and thanked him for his cooperation in resolving the crisis. An official press release

said Singh told the CM that he had always enjoyed a cordial relationship with the TN government. The alacrity with which the Centre responded to TN’s unusual proposal to buy NLC shares set off speculation that the UPA government is cozying up to the AIADMK to build a relationship in the run-up to the Lok Sabha elections.

Responding to a call from Jayalalithaa, NLC employees ended their strike and returned to work.

Why Tamil Nadu shows interest in buying share of NLC?

Of the total power generated (2490 MW) in NLC, bulk (1167MW) goes for Tamil Nadu. Tamil Nadu already reeling under electricity crisis, has no other option left. Also if employees strike continues, the entire southern region of

India

will become dark. Hence only Tamil Nadu government had shown utmost interest in this problem.

5% share of NLC to Tamil Nadu Government

The decks were cleared for the Tamil Nadu government to acquire the five per cent stake proposed to be divested in Neyveli Lignite Corporation (NLC), a move ending the month-long stalemate over the process and protests by the central PSU workforce. The way for the State to purchase the shares was paved following discussions in Mumbai among officials from Tamil Nadu, led by Mr. K. Shanmugam, Principal Secretary (Finance), and those of the Centre and Securities and Exchange Board of India (SEBI).

Announcing this, Chief Minister Jayalalithaa, in a statement, said five State PSUs, whose eligibility was discussed earlier at a meeting in New Delhi last week, would be buying the five per cent stake to be shed by the Centre in the ‘Navaratna’ PSU. It would be a Rs.500-crore deal. She described the development as a major victory for her government, the NLC workers and people of Tamil Nadu.

While agreeing to her suggestion for divesting the stake in favour of the State PSUs, the Centre, however, struck to its position of offloading five per cent in NLC. Ms. Jayalalithaa had, in one of her letters on the issue to Prime Minister Manmohan Singh, pointed out that since public holding in NLC was already 6.44%, it would be sufficient if 3.56% was divested.

The disinvestment, construed by political parties in the State, including Dravida Munnetra Kazhagam, an erstwhile ally of the Congress, and workforce of the central PSUs as a privatisation move, was necessitated by the minimum public holding norms. Dr. Singh had cited the Securities Contract (Regulation) Rules, 1957, in this regard and underscored the need to comply with them by August 8. While the minimum public shareholding norm for private firms is 25 per cent, for PSUs it is 10 per cent.

At the meeting earlier, the State government proposed that the Tamil Nadu Industrial Development Corporation (TIDCO) be given 25% of the NLC stake to be offloaded; State Industries Promotion Corporation of Tamil Nadu (SIPCOT) 45%; Tamil Nadu Industrial Investment Corporation (TIIC), Power Finance & Infrastructure Development Corporation Ltd (Powerfin) and Tamil Nadu Urban Finance & Infrastructure Development Corporation Ltd (TUFIDCO) 10% each.

Ms. Jayalalithaa said the State government team had suggested at the meeting that the share sale price be arrived at taking into consideration the average price at which the NLC scrip was traded in the earlier weeks.

ROAD TO DISINVESTMENT
June 21, 2013	Cabinet clears sale of Centre’s 5% stake in Public Sector unit NLC
June 25, 2013	Tamil Nadu Chief Minister writes to Prime Minister, says TN govt is willing to buy Centre’s stake
July 01, 2013	Centre says it is open to TN’s offer
July 02, 2013	Nearly 30, 000 NLC workers go on strike
July 07, 2013	SEBI gives nod to TN’s proposal, but asks State Government to send a concrete plan
July 15, 2013	NLC stake sale to Tamil Nadu is cleared; Tamil Nadu government to buy 5% stake for Rs. 500 crore

The route of Institutional Placement Programme (IPP) was adopted in respect of sale of five per cent equity in the Neyveli Lignite Corporation (NLC) as opposed to the Union government’s original scheme of selling the NLC shares through Offer for Sale (OFS) mechanism to the public.

Jayalalithaa thanks Manmohan:- Chief Minister Jayalalithaa thanked Prime Minister Manmohan Singh for his support in getting five Tamil Nadu public sector undertakings the five per cent stake in NLC. According to an official release, Ms. Jayalalithaa spoke to Dr. Singh over phone and told him that his intervention led to a satisfactory agreement at the meeting of officials from Tamil Nadu and those of the Centre and SEBI in Mumbai. Dr. Singh, the release said, appreciated and thanked Ms. Jayalalithaa for the efforts she took to resolve the issue. The Prime Minister said he was for cordial relations with State governments.

Employees and contract workmen of the Neyveli Lignite Corporation called off their 13-day long strike and rushed to their work spots the moment they heard the news that the State government had clinched the deal with the Securities and Exchange Board of India on the purchase of 5 per cent of NLC shares.

Monday, July 8, 2013

NLC issue: Centre favourable to Jaya's offer???

Responding favourably to Tamil Nadu Chief Minister Ms. Jayalalithaa’s offer to buy 5% equity in Neyveli Lignite Corporation (NLC), the Union government’s Disinvestment Department has written to the State to depute an officer to discuss the modalities for the proposed sale. A communication to this effect was sent to State Chief Secretary Ms. Sheela Balakrishnan, according to Mr. Ravi Mathur, Secretary of the Department of Disinvestment, which comes under the Union Finance Ministry.

Mr. Mathur told journalists told that discussions among the Central and State governments and the Securities and Exchange Board of India (SEBI) would cover a number of issues, including pricing. Earlier, in a letter to Prime Minister Manmohan Singh, Ms. Jayalalithaa offered to purchase the stake through State public sector undertakings. Mr. Mathur said the SEBI had agreed to consider her offer. It was up to the Coal Ministry (under whose administrative control comes the NLC) to discuss the implications of the latest development with the NLC management and unions, which had been on strike to protest the disinvestment move.

SEBI had set an August 8 deadline for all listed Central public sector units to have a minimum 10% public shareholding.

IPP method may be adopted:-

The route of Institutional Placement Programme (IPP) may be adopted in respect of sale of five per cent equity in the Neyveli Lignite Corporation (NLC) as opposed to the Union government’s original scheme of selling the NLC shares through Offer for Sale (OFS) mechanism to the public. This was indicated by Ravi Mathur, Disinvestment Secretary, and a release of the Central government. Mr. Mathur, who was in Coimbatore to attend a meeting, told reporters that the SEBI’s stipulation was that the stake sale to State PSUs should be through the IPP route. Also, the purchasing company had to be registered with SEBI as a Qualified Institutional Buyer (QIB).

The official release stated that the SEBI had suggested that the proposal be covered within the IPP guidelines but the modalities needed to be worked out

among officials of the State government, Coal Ministry and the Department of Disinvestment. The release said that, in the offer document for IPP, the seller can propose the criteria on the basis of which allocation could be made. This can be used to give preference to any set of Qualified Institutional Buyers including State Undertakings of Tamil Nadu.

Earlier, Chief Minister Jayalalithaa made an offer, in her letter to Prime Minister Manmohan Singh, that the Centre should consider giving the five per cent shareholding in the NLC to Tamil Nadu State Public Sector Undertakings

such as Tamil Nadu Industrial Development Corporation (TIDCO), State Industries Promotion Corporation of Tamil Nadu (SIPCOT) and Tamil Nadu Industrial Investment Corporation (TIIC). On the amount of revenue to be generated through the stake sale, Mr. Mathur, who is holding the additional charge as Minority Affairs Secretary, said it depended on stock market conditions. Still, it was estimated that the move would generate Rs. 400 crore to Rs. 500 crore.

CM writes to PM again:- Painting a grim power-deficit scenario for Tamil Nadu, and the south as a whole, should the labour unrest persist over the Central Government’s decision to offload its equity in the Neyveli Lignite Corporation (NLC), Chief Minister Ms. Jayalalithaa urged Prime Minister Dr. Manmohan Singh to regard the feasible measures suggested as alternatives to disinvestment.

In a letter to Mr. Singh, Ms. Jayalalithaa said the NLC was the largest Navratna Central Public Sector Undertaking in Tamil Nadu employing more than 25,000 persons and generating 2,490MW of power for the southern Region. If the labour unrest continued, it would not only result in Tamil Nadu losing its share of 1,178MW and a relapse into power deficit, but a cumulative loss of about 2,500MW for the entire south.

In the light of the Securities and Exchange Board of India (SEBI) formally proposing to the NLC the possibility of arriving at a special procedure on a case-by-case basis for the offloading of shares by the Government of India, “it appears that working out an arrangement to offload 5 per cent equity, or even 3.56 per cent of the equity, to meet the target of 10 per cent, to Government of Tamil Nadu owned Public Sector Undertakings is something that SEBI can quite easily work out,” she wrote.

Recalling her earlier letter in which she suggested that the 5 per cent shareholding be offered to one or more State-run undertakings, Ms. Jayalalithaa said the PSUs such as TIDCO, SIPCOT or TIIC met the criteria of ‘Qualified Institutional Buyers’ (QIBs) and were eligible to purchase shares under an Institutional Placement Programme. These entities also fell within the purview of “public” as defined under Rule 2(d) of the Securities Contracts (Regulation) Rules, 1957, she said.

ROAD TO DISINVESTMENT
June 21, 2013	Cabinet clears sale of Centre’s 5% stake in Public Sector unit NLC
June 25, 2013	Tamil Nadu Chief Minister writes to Prime Minister, says TN govt is willing to buy Centre’s stake
July 01, 2013	Centre says it is open to TN’s offer
July 02, 2013	Nearly 30, 000 NLC workers go on strike
July 07, 2013	SEBI gives nod to TN’s proposal, but asks State Government to send a concrete plan