Govt’s disinvestment plans remain strong despite Covid-19 headwinds

NEW DELHI:  Disinvestment intentions — both strategic and non-strategic — seem unfazed by the Covid-19 pandemic as the government is gearing up to invite expressions of interest (EoIs) for ITDC, BEML, Concor and Neelachal Ispat Nigam Ltd (NINL) in the next few days.

While the coronavirus pandemic has put hurdles on the government’s ambitious Rs 2.1 lakh crore divestment plan for this fiscal, officials say such activities would remain at high levels starting early next year.

According to the sources in the finance ministry, there is a meeting on December 30 to decide on the final terms and conditions of EOI of India Tourism Development Corporation (ITDC)’s sale of Ashoka Hotel, which will be followed by another meeting for BEML.

“The new year is going to be very hectic. There will be a series of disinvestments starting with ITDC and BEML and Concor. 

Then we have a mega IPO of LIC. We will try to make up for what we lost during the lockdown period,” a senior official from the finance ministry told this publication. During the ongoing fiscal year, EoIs of Bharat Petroleum Corporation Ltd (BPCL) and Air India were laid out. However, the last date for bid submission has been revised several times, mainly on account of lockdown, delaying the whole process. The strategic sale of Air India and BPCL is crucial for the government to achieve its target. 

Later, as the economy began showing some signs of recovery, the government once again kickstarted the process, inviting EoIs for Pawan Hans and Shipping Corporation of India. So far, the Centre has raised Rs 26,364.53 crore as it evaluates plans to reduce its stake in state-owned entities to 51 per cent. The total amount includes Rs 13,696.59 from dividend and Rs 10,992 crore from Bond ETF. 

“Even during a pandemic, our efforts to disinvest some of the big companies are going on fine. The EoIs have come in and now we are on the next stage to complete these transactions. I expect DIPAM to be able to prove that they are even more actively engaging in those disinvestments for which the cabinet has already given approval,” Finance Minister Nirmala Sitharaman said during her recent address to a business chamber, setting the agenda.

The Cabinet has approved strategic sale in over 25 public sector companies including, Concor India, Pawan Hans, Scooters India, Bharat Earth Movers Ltd (BEML), Central Electricity Corporation, Cement Corporation and some steel plants of SAIL, along with the transfer of management control.

As announced earlier, the finance ministry is planning to sell 20-25 per cent stake in IRFC through an IPO, which is set to hit the market in next few days and 27 per cent stake in state-owned telecom infrastructure provider RailTel Corporation via IPO. The government is expecting to raise about Rs 6,000 crore from these two IPOs.

Rs 2.1 lakh cr Disinvestment target for FY21

Below 51%  stake policy

Any firm in which the government will pare its stake to below 51 per cent will cease to be a ‘government company’ under the Companies Act.