The government is likely to privatise five public sector undertakings by the end of this year, Bloomberg has reported. The Centre has a disinvestment target of Rs 65,000 crore in the financial year 2022-23. It already has a road map in place for disinvestment in all non-strategic and strategic sectors.
Among the companies to be disinvested this year, the three companies on the table are Bharat Petroleum Corporation Ltd (BPCL), RINL and Pawan Hans. Apart from this, LIC IPO is also going to come later this month, through which the government plans to offload its around five per cent stake.
Earlier this year, the government has already transferred its 100 per cent shares in Air India to Tata group’s wholly-owned subsidiary Talace Pvt Ltd, along with the management control. Tata Steel Long Products Ltd also won the bid to acquire Neelachal Ispat Nigam Ltd (NINL) as a strategic buyer with the highest bid of Rs 12,100 crore.
The government has a disinvestment target of Rs 65,000 crore for the current financial year 2022-23, according to Union Budget documents. For the financial year 2021-22, it had set a disinvestment target of Rs 1.75 lakh crore in the last year’s budget. Out of this only Rs 78,000 crore could be achieved, a reduction of 55.4 per cent.
In the previous year’s Budget Speech 2021, Finance Minister Nirmala Sitharaman had said, “We have kept four areas that are strategic where bare minimum CPSEs [central public sector enterprises] will be maintained and rest privatised.”
The Companies and Their Plan So Far
Recently, Minister of State for Finance Bhagwat Karad told in the Rajya Sabha that the disinvestment process of oil marketing firm Bharat Petroleum Corporation Ltd (BPCL) has reached the second stage and many expressions of interest (EoI) have been received regarding its transition.
Regarding ailing helicopter operator Pawan Hans, the government has received three financial bids for its stake and is likely to complete the divestment of the public sector enterprise soon. The privatisation of Pawan Hans is estimated to fetch Rs 300-350 crore. This is the government’s fifth attempt to privatise the company.
Union Steel Minister Ram Chandra Prasad Singh in the Lok Sabha recently said the disinvestment of Rashtriya Ispat Nigam Limited (RINL) would lead to the infusion of capital, expansion of capacity, infusion of technology and better management practices. He added that RINL has not increased its profits during the last 10 years, and its cumulative losses were Rs 7,122.25 crore.
The Cabinet Committee on Economic Affairs (CCEA) had in January 2021 accorded ‘in-principle’ approval for 100 per cent disinvestment of the government’s shareholding in RINL along with RINL’s stake in its subsidiaries and joint ventures through strategic disinvestment by way of privatisation.
The IPO of Life Insurance Corporation is also expected to be launched by the end of this month. The government aims to raise around Rs 60,000 crore by selling its 5 per cent stake in the state-owned company. The government last month filed fresh draft papers for the IPO. Currently, the government has time till May 12 to launch the offer, failing which the Centre will need to file fresh papers with the Securities and Exchange Board of India, give the results of the December quarter and also update the embedded value.