New Delhi plans to sell stake in Coal India

NEW DELHI: India plans to raise 200 billion rupees (US$3.7bil) selling part of its stake in Coal India Ltd, the world’s biggest producer of the fuel, and narrow the widest budget deficit among major emerging economies.

The government, which owns 90% in the monopoly coal miner, plans to sell a 5% stake to the public and a similar holding to the company, according to a finance ministry’s draft proposal obtained by Bloomberg News.

Prime Minister Manmohan Singh’s administration sold stakes in companies including NTPC Ltd, NMDC Ltd and Oil India Ltd for about 240 billion rupees in the year ended March 31 to shrink the deficit, pay for subsidies and invest in public works. Coal India shares had their biggest gain in almost a year.

The disinvestment department has asked the coal ministry to take the company’s workers’ unions into confidence and gather support for the share sale, according to the document. The unions were assured at the time of the company’s initial public offering in 2010 by the then finance minister Pranab Mukherjee there would be no further disinvestment.

“We anticipate some labour issues and we will do our best to take them into confidence,” Coal Secretary S.K. Srivastava said in an interview.