Government decides SAIL share sale, VSNL land to fetch Rs 10K crore

NEW DELHI: The government today approved a public offer to sell 10.82 per cent of its stake in steel major SAIL and demerger of surplus VSNL land into a separate company - a decision that may fetch over Rs 10,000 crore to the exchequer.

The Union Cabinet also decided to impose 21 per cent duty on imports of power equipment, a move to protect domestic companies from cheap Chinese shipments but it disappointed the private power generation companies.

The government also deferred for the second time considering a Bill that seeks to amend an existing Act to give more powers to commodity markets regulator FMC.

Official sources said the Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Manmohan Singh, cleared SAIL public offer. The share sale process, proposed to be conducted through auction route or offer for sale, is expected to fetch over Rs 4,000 crore to the government, they added.

The Disinvestment Department will decide on the timing of the issue depending upon market conditions. The government currently holds 85.82 per cent stake in SAIL. Shares of SAIL closed at Rs 93.10, down 0.16 per cent over previous close.

Due to the poor market conditions, the government has not been able to launch the Rs 30,000-crore disinvestment programme for the current fiscal so far. A few days ago, it had put on hold the initial public offer (IPO) of Rashtriya Ispat Nigam Ltd (RINL) due to volatility in the markets.

Sources further said that "demerger of surplus land of VSNL has been approved". This issue has been pending since Tata Communications acquired the PSU in 2002 as the land assets owned by VSNL were not part of the deal. The surplus land has been lying unused.

The land is estimated to fetch Rs 6,150 crore to the exchequer.

The demerger of 773.13 acres, spread over at least five locations including Delhi, Chennai and Pune, was proposed to be carried out through HPIL, a Special Purpose Vehicle formed through a Cabinet decision in 2005. The DoT has proposed government taking 51.12 per cent stake in Hemisphere Properties Ltd (HPIL).