The Indian government has given an in-principal approval for disinvestment of an equity stake in the upcoming steel mill project of Indian state-owned miner National Mineral Development Corporation (NMDC), but the size of the equity to be offered to a private investor is yet to be fixed, a government official said on Friday, September 29.
The official said that the option of offering 49 percent equity or 50 percent equity in NMDC’s steel mill project was still under consideration.
The difference is significant as, in the case of 49 percent equity disinvestment, the management control of the steel mill would remain with NMDC, but if a private investor is offered a 50 percent stake, the latter will seek management control of the project.
The advisors on the issue of the disinvestment, SBI Capital Markets Limited, J Sagar Associates and Protocol Insurance, will submit their report on the disinvestment which inter alia includes suggestions on the size of the disinvestment, and a final decision will be taken based on the report, the official said.
However, it has been unofficially stated that, since various stakeholders in the steel mill projects, the state government of Chhattisgarh where the plant is located, trade unions and political opposition parties are against disinvestment of equity in the project, a strategic sale of equity without transfer of management control could also be considered by the government.
The government-owned primarily iron ore miner NMDC Limited has completed 90 percent of construction of the steel mill at Nagarmar, Chhattisgarh, which entails an investment of around $2.76 billion.