Tamil Nadu has offered to buy the entire 5% stake proposed for divestment in Neyveli Lignite Corporation. This and the positive response from SEBI must be appreciated. In addition, it is hoped that, as a sequel, the striking unions may resume production to feed the already power-starved state

In the last one week, many things have been happening at Neyveli Lignite Corp (NLC). The talk of divestment has been making rounds for quite some time and eventually when it happened, the trade unions, so many of them at that, having a total 30,000 members on their rolls, called for an indefinite strike from the midnight of 4th July.

The unions are up in arms against this proposal for divestment of Rs466 crore, to meet the Securities and Exchange Board of India’s (SEBI) mandate of minimum 10% public holding, in public sector enterprises by August this year.

Then, a sudden twist to this saga was done by the Tamil Nadu government, offering to buy the entire 5% stake proposed for divestment. And after due consideration, SEBI had made a ruling that this 5% stake should be sold to state public sector units through institutional placement programme.

Not a bad idea, but this has now set a precedent for such other similar proposals, which may be welcome. Such a move, in a way, is passing the baton from the left to the right hand, and yet it will enable a sense of participation and responsibility on the part of the states concerned, when such moves become universal in the country.

In any case, this lightning move by the Tamil Nadu government and SEBI’s positive response must be appreciated. And it is hoped that, as a sequel, the unions may call off the strike and recommence production, to feed the already power starved state, which has load shedding for several hours a day.

NLC has several projects on hand, making steady progress. These are Bithnok thermal power project (250 MW), Barasingsar (extn 250 MW), NLC-UPRVUNL Ghatmpur Power (1,980 MW), Sirkali Thermal Power (4,000 MW) and the Devangudi mine project.

In the meantime, the Union government has identified eight lignite blocks, which are likely to be offered under the competitive bidding process. In this case, there will be transparency. More details are expected as, at the moment. Even basic data on reserves, types of coal found, geological reports have not been made public.

Of these, three sites are in Rajasthan, viz, Nagurda-Joranda (Barmer), Bapaue and Bithnoke Extn (both in Bikaner).  Rest are in Gujarat, viz, Panandhro Extn, Bharkandam and Ghala (in Kutch), Vastan (Surat) and South of Rajpardi (Bharuch).  All these plants have been correlated to specific end-users.

NLC’s current capital base is Rs1677.71 crore and has disposable reserves and surplus of Rs20,362.18 crore, as at 2011-12.  Its book value is Rs71.46 in 2011-12 and had declared 28% dividend that year.

In view of the present commitments and expansion plans under progress, Neyveli Lignite will probably do well to invite a reputed foreign collaborator while making bids for the eight lignite blocks that the Union government proposes to offer in the next few months.

But, the immediate importance and urgency, is to persuade the striking workers to return back to commence production.

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)