Even though the new Public Sector Enterprises (PSE) policy unveiled in 2021 created a large pool of PSEs in both the strategic and non-strategic sectors for privatisation, the slow pace of the process has limited the government’s non-debt capital receipts. The new policy has to be “internalised” by all the stakeholders in the government and PSEs to succeed, department of investment and public asset management secretary Tuhin Kanta Pandey told FE. FE’s Prasanta Sahu. He also underlined the need to take care of the bidders’ interests and give them a fair deal. Certain flexibility has to be given to them even post-disinvestment, he said.
How do you plan to raise another Rs 20,000 crore to meet FY23 revised disinvestment target of Rs 50,000 crore?
It has to come from some of the transactions that we have been working on like a stake sale in Hindustan Zinc Ltd (the government’s 29.54% stake in HZL is worth Rs 42,800 crore in the current market prices) and other minority stake sales. The privatization transactions currently under process (IDBI Bank, Shipping Corporation and BEML) will not get concluded by March and hence won’t fetch any revenue in the current financial year.
Are you relying on the current pipeline to meet the disinvestment revenue target of Rs 51,000 crore for FY24?
We will pursue ongoing transactions such as the IDBI Bank and NMDC Steel. We are not assuming any new pipeline for the next year. In the case of IDBI Bank, the process has begun for short-listing of the bidders. A fair amount of documents have come from the bidders for processes such as security checks and fit-and-proper assessment. Only those bidders cleared by RBI will get access to the data room of the bank before financial bids. We are trying to float an expression of interest (EoI) for Container Corporation disinvestment later this month and we expect the transaction to go through next year.
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How do you see the criticism of Life Insurance Corporation for investing in Adani group companies?
LIC has a large investment portfolio. It invests according to the Insurance Regulatory and Development Authority guidelines. The biggest chunk of its fund is invested in the G-Secs. LIC has invested in Nifty companies and did not put all money in one company. Stock prices go up or down depending on market conditions and LIC has to keep taking prudent investment decisions.
The disinvestment revenue target has been reduced to Rs 50,000 crore for FY23 from Rs 65,000 crore and it is pegged at Rs 51,000 crore for FY24. Is there now only a limited bandwidth for disinvestment?
Easy pickings are already done and there is limited scope for minority stake sales (with the government holding in valuable PSEs at around 51% threshold). Privatisation processes are BMMP (bandwidth, market available, minority shareholders and the process). A process may take one year or more and ultimately bidders may not be available. For example, in Rashtriya Ispat Nigam Ltd, there is resistance (from employees) against privatisation even though the company is in trouble. It has a 7 million tonne of capacity, but it is not being utilised. So, the realisation has to come from that enterprise that disinvestment is being done for its growth and to secure employees’ future. Such resistance vitiates the disinvestment climate. When the policy has been put into the domain, it also means that the people also internalise that ultimately the government will not like to be in business. But, that internalisation process takes time through education and awareness.
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What are other issues that affect privatisation?
It takes time to deal with land leasing with the state governments, demerger issues, and court cases and create a congenial atmosphere. Then, the bidders’ interest and our capacity to give them a fair deal also matter. If we make that very onerous, the bidders may lose interest. Certain flexibility also has to be given even post-disinvestment.