PSU disinvestment: Modi govt amends process for strategic sale

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Updated: October 4, 2019 7:09:48 AM

From now on, the DIPAM and the NITI Aayog will jointly identify PSUs for strategic disinvestment.

DIPAM, NITI Aayog, PSU, NEEPCO, BPCL,  Air India, DIPAM secretary, Shipping CorporationThe idea is to streamline and fast-track the process, reducing the role of administrative ministries which often used to place hurdles on the path of major stake sale.

In what shows the Modi 2.0 government’s policy intent to privatise a clutch of large state-run firms, starting with the current financial year itself, the Cabinet on Thursday approved new processes for strategic disinvestment, where the Department of Investment and Public Asset Management (DIPAM) will play the role of the nodal secretariat. The idea is to streamline and fast-track the process, reducing the role of administrative ministries which often used to place hurdles on the path of major stake sale.

From now on, the DIPAM and the NITI Aayog will jointly identify PSUs for strategic disinvestment. Currently, the DIPAM executes strategic deals based on the list of PSUs identified by the NITI Aayog. DIPAM secretary would now co-chair the inter-minister group on disinvestment, along with the secretary of administrative ministries concerned, sources told FE.

Last week, a group of secretaries gave its approval for sale of the government’s entire 53.29% stake in BPCL and its 63.75% stake in Shipping Corporation, 30% in Concor, 100% in NEEPCO and 75% in THDC. The current market value of the government’s stake to be offloaded in these companies is estimated at Rs 88,900 crore, which is 85% of the disinvestment revenue target for this fiscal.

In the TCIL IPO, which is likely to happen later this year, the Centre will sell 15% from its stake, while the company would raise capital through fresh equity offerings worth about 10% stake.

After the failed attempt last year, the government will shortly solicit expression of interest (EoI) from prospective buyers for Air India with an objective to conclude the transaction by the end of FY20. It could offer the entire stake (compared to 76% last year) and relax other conditions to lure buyers. Disinvestment receipts so far this year have been about Rs 13,000 crore, 13% of the annual target.

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