‘Earnings of NT shares will be spent for rural development’

Kathmandu, February 1:

Revenue Secretary Rameshore Khanal has said that money earned from the sales of government’s equity in Nepal Telecom (NT) would be utilised for rural infrastructure development and expansion of telecommunication services.

“Every single penny earned from the sales of 10 per cent equity of NT to public would be spent for the infrastructure development and telecommunication expansion to the rural areas,” Khanal told the media persons today at the ministry of finance. As a part of divestment and privatisation plan, the government is selling its 10 per cent or 7.5 million unit shares of NT to public through an auction and five per cent to the Telecom’s employees. The sales have already begun on January 23 and will last till February 26 with the coordination of Citizen’s Investment Trust (CIT), as its sales manager.

The government plans to raise at least Rs 9 billion by selling NT’s share. The price of per unit share is quoted at Rs 600 minimum, which is after adding Rs 500 premium to the face value of Rs 100 for each share.

However, the government’s decision to sell 10 per cent shares to public through auction at minimum price of Rs 600 and sales of the five per cent to the employees at the subsidised rate of Rs 90 per unit, has drawn a criticism.

Khanal tried to defend the criticism and said that the minimum price for each share to be sold for the public was fixed after calculating the book value of each share, profit earning trend and future earning potential. According to him, the book value of each share of NT was Rs 212, when the decision was taken to sell shares to the public and addition was made by multiplying by two and half times to the book value, which is within the limitation. The decision to allocate five per cent share to the employees was made as per the existings rules, he said, adding that ‘no decision has been taken so far to give shares to board of directors.’