While the Centre is poised to mop up a whopping Rs 1 lakh crore from disinvestment in FY18, the target of Rs 80,000 crore for the next year is challenging, as the pipeline is modest and markets have become volatile. Besides the privatisation of Air India-Air India Express (AI-AIE) combine, the second tranche of Bharat 22 ETF and listing of the entity to emerge out of the merger of three PSU general insurers and several offers for sale (OFSs) are what the government is banking on.
Other routes of disinvestment, such as buybacks by PSUs, strategic sales of a clutch of relatively smaller companies and listing of several other PSUs would also be explored.
Officials said the government will shortly invite expression of interest for AI-AIE, which would be offered to investors as one unit, while other non-core assets and nearly half AI’s Rs 60,000 crore debt could be housed in a special purpose vehicle for monetisation separately.
Though valuations are yet to be disclosed, officials reckon that receipts from the sale of AI-AIE next year could be around Rs 25,000 crore, largely for its fleet of 115-odd aircraft and the national carrier’s valuable bilateral flying/landing rights and parking slots at airports across the world.
While two PSU general insurers, GIC Re and New India Assurance, have already been listed, the remaining three such insures — Oriental Insurance Company, United India Insurance Company and National Insurance Company — will be amalgamated and the combined entity will be listed next year to fetch around Rs 15,000 crore. GIC Re and New India Assurance had fetched Rs 21,070 crore or 21% of the disinvestment revenue in FY18.
The Centre’s disinvestment proceeds this fiscal are poised to comfortably exceed Rs 1 lakh crore, more than double the level achieved last year, against the target of Rs 72,500 crore for FY18. It has netted Rs 92,500 crore so far, with the sale of its entire stake in Hindustan Petroleum Corporation to Oil & Natural Gas Corporation to garner a handsome Rs 36,915 crore.
However, the options of big deals are limited for next year. Besides loss-making AI, the Centre is mulling to divest either its 53.95% stake in GAIL or the firm’s gas utility business. Indian Oil and Bharat Petroleum Corporation have shown interest in acquiring GAIL. The Centre’s stake in GAIL is estimated to be around Rs 42,000 crore at current market prices. Though doable if needed, the proposed GAIL stake sale is premature at this stage, officials said.
After ONGC’s acquisition of HPCL, the sale of GAIL would also fit into the Centre’s plan of creating large PSU oil conglomerates to compete globally.Officials are also pinning hopes on a line-up of OFSs, including in Indian Oil, NHPC and SAIL, which could fetch the Centre around Rs 20,000 crore next year.