Taking into consideration the volatile market conditions, government may ask Coal India (CIL) to buy back a portion of the proposed 10 per cent share sale.
Earlier, the government planned to raise Rs 17,000 crore by offloading its 10 percent stake in CIL through the Offer For Sale (OFS) route. However, the government is not hopeful of garnering such an amount especially when the market sentiment is very weak.
Therefore, the government plans to split the 10 per cent stake sale into Offer for Sale (OFS) and buyback.
The government's stake in CIL currently stands at 90 per cent. At the current price, a sale of 56.84 crore shares, or 10 per cent of government holding, could fetch around Rs 17,000 crore to the exchequer.
A draft cabinet note was floated recently by the Department of Disinvestment (DoD) to seek comments from administrative and other concerned ministries for a 10 per cent stake sale in CIL in tranches.
The coal ministry is expected to give its opinion to the department for formulating the final cabinet note.
It is learnt that CIL may need the clearance of its board to use its cash surplus for the buyback of government's stake. The firm has a cash balance of about Rs 60,000 crore.