After kicking off the disinvestment process for OIL (Oil India Ltd) and NHPC through initial public offers (IPOs), the government is now chalking out plans to dilute 5 per cent stake in NTPC (National thermal Power Corporation). According to top finance ministry officials, the power ministry has already done its due diligence and the proposal is expected to go to the Cabinet soon.

“Once the approval is sought, the company will have to file for a follow-on public offer with the Securities and Exchange Board of India (Sebi) considering the timeline they have in mind for the disinvestment,” the official said. NTPC chairman R S Sharma was not available for comments.

The government currently holds 89.5 per cent stake in the power company and plans to bring it down to 84.5 per cent. As per the current market price of Rs 205.10 per share, the government is expected to rake in as much as Rs 7,500 crore.

“Though there has been an over supply of power sector paper in the market recently and IPOs of NHPC and Adani haven’t done well, NTPC can still command premium valuation. Due to its current low float it will be gobbled up by high quality investors,” said a Mumbai-based infrastructure analyst who did not wish to be named.

The money will help the government shore up funds to the tune of Rs 15,000 crore this fiscal through disinvestment in three companies — OIL, NHPC and NTPC. The Economic Survey for 2009-2010 had suggested a target of Rs 25,000 crore through disinvestment every year. However, no such target has been officially set by the finance ministry with finance minister Pranab Mukherjee stating that disinvestment would be taken up on a case-to-case basis.