Cabinet Okays Strategic Divestment of 5 PSUs

The government kicked off a blockbuster disinvestment plan, lining up the sale of five public sector units, including majority stakes in bluechip oil company Bharat Petroleum Corp Ltd and Shipping Corporation of India. Also on sale will be a 31% stake in Container Corporation of India along with management control.

Based on current market prices, the sale of stakes in these three companies will fetch the government about ₹78,400 crore, taking it close to the disinvestment target for the fiscal year.

The cabinet committee on economic affairs, which met under the chairmanship of Prime Minister Narendra Modi, also cleared the sale of its entire stake in Tehri Hydro Development Corp of India and North Eastern Electric Power Corporation to NTPC.

The CCEA also gave in-principle clearance to the reduction of the government’s stake in select public sector units to 51%, “while retaining management control on case-to-case basis, taking into account the government shareholding, and the shareholding of government-controlled institution,” according to a release.

The government proposes to raise ₹1.05 lakh crore from disinvestment in the current financial year. It had exceeded asset-sale targets of ₹1 lakh crore in FY18 and ₹80,000 crore in FY19. In the current fiscal year, by the end of September, the government had only raised ₹12,359 crore through disinvestment.

At current market value, the government can raise about ₹63,000 crore from selling its entire 53.3% stake in BPCL, ₹2,000 crore by offloading 63.7% in Shipping Corporation of India and ₹13,400 crore from selling 30.8% of Concor.

The actual realisation from BPCL could be much higher on account of the control premium the government will seek from any strategic investor. Big international oil companies including Saudi Aramco are said to be keen on investing in BPCL, given the refiner’s strong presence in fuel retailing among other things.

The BPCL strategic sale will not include the 61.7% stake the company holds in Numaligarh Refinery. This will be offered to a public sector entity in the oil and gas sector.

The government will retain a 24% stake in Concor given that it is “integrally linked” with Indian Railways.

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