Finance ministry stops NTPC’s staff discount

The employees of public sector enterprises won’t be pleased with the finance ministry’s views on allotment of shares to them at a ...

The employees of public sector enterprises won’t be pleased with the finance ministry’s views on allotment of shares to them at a discount, in offers for sale by the government.

In a letter, dated September 15, 2004, the finance ministry had nixed a proposal by National Thermal Power Corporation (NTPC) to offer shares to its employees at a discount. This is being seen as an indication of future policy by the government on allotments to employees at the time of sale of its stake.

The letter states: “since the government is piggybacking its offer-for-sale on the IPO of NTPC, it cannot offer any discount on the offer price to the employees as a part of the current offer”.

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The finance ministry has clarified that in the case of ONGC, the 5 per cent discount to offer price was for all retail investors, not just employees.

Up until now, the sale of shares to PSU employees was being governed by the Department of Public Enterprises (DPE) guidelines, which allow for a discount of 15per cent to the average price realised through disinvestment.

However, as per the guidelines no more than 200 shares per employee could be allotted and that too subject to a lock-in of three years.