Balco stake sale gets nod

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved residual stake sale by the government in Vedanta-owned Bharat Aluminium Company (Balco). The move could fetch about Rs 3,000 crore to the exchequer at a time when the finance ministry is trying hard to contain the Centre's fiscal deficit at 4.8 per cent of gross domestic product (GDP).

The finance ministry has already initiated the process of arriving at the company's valuation, a bone of contention between Vedanta and the government. Currently, London-listed Vedanta holds 51 per cent stake in Balco.

In January 2012, Vedanta had proposed to acquire the government's remaining stake in the erstwhile public sector undertaking, after various legal hurdles. Vedanta's board has the approval of shareholders to offer up to Rs 3,026.14 crore to the government for its residual stake in Balco.

However, it is learnt the government has decided to sell its residual stake through the auction route to get a better price. Vedanta will also have the option to bid in the auction.

In 2011-12, Balco had produced about 246,000 tonnes of aluminium; it had 18 per cent market share by production volume. For 2012-13, it had reported gross revenue of Rs 3,050 crore and earnings before interest, tax, depreciation and amortisation of Rs 374 crore.

Earlier, the law ministry had paved the way for stake sale by the government. The matter was referred to the law ministry after the prime minister held a review meeting on disinvestment last month.

Finance Minister P Chidambaram recused himself from a decision on residual stake sale in Hindustan Zinc and Balco, as he was earlier a lawyer for Vedanta. Law Minister Kapil Sibal has been nominated to represent the finance ministry in this matter.

For this financial year, the government has estimated Rs 54,000 crore of disinvestment proceeds. Of this, Rs 14,000 crore is to come from the non-government companies.

Meanwhile, the CCEA has deferred a proposal of Indian Oil Corporation to acquire Malaysian firm Petronas' 10 per cent stake in shale gas assets and a liquefied natural gas project in British Columbia for $900 million.