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| Image Credit: news.wsu.edu |
Green is making the government’s
ambitious plans to sell its family silver see red! Global
The move by the government to sell a
small part of the blue chip companies like Coal India, National Mineral
Development Corporation (NMDC) and Manganese Ore India Limited (MOIL) could run
into rough weather. Global funds which were apparently sounded out ahead of the
disinvestment plans by investment bankers have said to have poured cold water
over the government’s plans.
The government was looking to sell 10
per cent stake each in the three companies during the current financial year.
If the government plan were to succeed, disinvestment in the three companies
could have fetched it a little under Rs. 25,000 crore or a little under US$ 3.73
billion. The government has set itself a target of Rs. 56,500 crore or nearly
US$8.4 billion from disinvestment in the current year.
Some leading funds are believed to
have indicated that environment related issues could force them to abstain from
the disinvestment process. Several sovereign funds and private equity investors
are facing the heat from green groups to abstain from investing in companies
which, in their opinion, are not environmentally friendly.
There are already examples of some
influential funds having excluded Coal India and National Thermal Power
Corporation (NTPC), from their investment radar. Norway’s Government Pension
Fund Global (GPFG) decided to abstain from investing in 52 power companies
around the world where the main source of energy was coal.
While the disinvestment target of the
government could take a hit because of this, the listed companies could also be
hit at the bourses because of the lack of funding: in effect, it could be a
double whammy for them.
Several global pressure groups,
citing the need for sustainable environment, are putting pressure on large
funds to avoid investing in companies that are not careful about the
environment.
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