Disinvestment: Govt plans offer for sales route in six CPSEs, including Coal India

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Published: December 4, 2019 3:42:15 AM

This year, the Centre has so far mobilised Rs 17,364 crore (or 17% of the annual disinvestment revenue target), 83% of which are via ETFs.

The Centre is eying significant amount of revenue from big ticket strategic sales in five CPSEs — BPCL (53.3% stake sale), Concor (30.8%), NEEPCO (100%), THDC (74.2%) and Shipping Corporation (63.75%).

Anxious to garner more non-tax revenues in the backdrop of likely huge shortfall in tax receipts this fiscal, the Centre may sell minority stakes in half-a-dozen central public sector enterprises (CPSEs), including Coal India and Cochin Shipyard via offer for sales (OFS) route.

Other CPSEs in which it could sell stake are Hindustan Aeronautics (HAL), Bharat Dynamics (BDL), Mishra Dhatu Nigam (MDNL) and Garden Reach & Shipbuilder Engineers (GRSEL). Finance minister Nirmala Sitharam has given ‘in-principle’ approval for these OFSs.

While the exact size of the stake sale and timing will be decided keeping in mind the market appetite, the stake sale in CIL might be between 3-5%, which is worth Rs 3,800-6,400 crore at current prices. In smaller CPSEs, it could disinvest up to 10% through OFS. While the Centre holds 69.05% in CIL, it owns 89.97% in HAL, 87.75% in BDL, 75.21% in Cochin Shipyard, 74.5% in GRSEL and 74% in MDNL.

Besides stake dilutions through exchange traded funds (CPSE ETF and Bharat 22 ETF), the Centre had also sold 3.19% stake in the coal miner via an OFS to raise Rs 5,218 crore in FY19. The company had also bought back shares worth `1,040 crore from the government in the previous fiscal.

The Centre is staring at the highest ever shortfall of about Rs 2.5 lakh crore (15%) in its net tax revenue from the budgeted level this year and a decline of 2 percentage points or thereabouts in nominal GDP will likely be an additional pressure point in its fiscal management.

According to sources, the government is scouting for avenues to bolster its revenue. It will likely scale up disinvestment programme this fiscal from budget estimate of Rs 1.05 lakh crore to about Rs 1.3 lakh crore.

The Centre is eying significant amount of revenue from big ticket strategic sales in five CPSEs — BPCL (53.3% stake sale), Concor (30.8%), NEEPCO (100%), THDC (74.2%) and Shipping Corporation (63.75%).

The BPCL asset to be sold to a strategic buyer — possibly a private firm — will include the entire government stake of 53.3% in it, but exclude the firm’s 61% stake in Numaligarh Refinery (FY19 net worth Rs 5,551 crore) which will remain in the public sector.

While Shipping Corporation (government stake 63.75%) and Concor (30.8% to be divested out of 54.8%) have also been approved for strategic sale, the sale of government stakes in two other PSUs — NEEPCO (100%) and THDC (74.2%) — will be exclusively to state-run power producer NTPC. These five strategic stake sales could fetch close to Rs 90,000 crore at current market prices.

This year, the Centre has so far mobilised Rs 17,364 crore (or 17% of the annual disinvestment revenue target), 83% of which are via ETFs.

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