The department of investment and public asset management (DIPAM) will review the FY21 Budget plan to raise an ambitious Rs 2.1 lakh crore via sale of government stakes in companies in light of the Coronavirus pandemic. It feels the feasibility of many proposed transactions are now suspect.

Among the mega deals in the disinvestment pipeline, the government had planned to garner Rs 70,000-80,000 crore by selling 53.3% stake in an oil retailer-cum-marketer in FY21. A plan was also announced to sell 30.8% in ConCor to a strategic buyer. Further, a substantial amount was planned to be raised by selling up to 10% stake in state-run insurer LIC through its listing.

Officials admit that the disinvestment target is irrelevant post COVID-19 as no one knows when economic activities will become normal. While listing of the insurance behemoth LIC is unlikely in FY21 due to volatile market conditions, big ticket strategic sales such as BPCL are also facing headwinds.

With lockdown imposed by many countries worldwide including India, DIPAM is expected to extend for the second time the deadline for submission of expression of interest (EoI) for strategic sale of the Centre’s 100% stake in Air India (AI). In the wake of the coronavirus pandemic, the Centre had recently extended the last date of EoI for AI by 45 days to April 30. Despite a massive contraction in the aviation sector since March last week, there is some flicker of hope as potential bidders are still enquiring about the debt-ridden national carrier, sources said.

Similarly, if lockdown continues beyond May 3 in India, the deadline for EoI for the government’s 53.3% stake in BPCL (excluding its stake in Numaligarh Refinery) may also need to be extended further. The BPCL EoI deadline was earlier extended from May 2 to June 13. In line with stock market slump, the market value of the Centre’s stake in BPCL was about Rs 41,000 crore (BSE) on Tuesday.

The drastic fall in global crude prices also hurt disinvestment prospects of BPCL.The West Texas Intermediate (WTI), benchmark US crude, was pushed to below $0 a barrel for the first time in history on Monday due to a glut in energy market, paucity of storage capacity and a lack of demand in the aftermath of the pandemic.

“This will not be good news for the disinvestment plan of BPCL. This may have to wait till the prospects of the industry improve,” Care Ratings said on Tuesday.

Among the possibilities, the government could garner some revenues from sale of the BPCL’s 61% stake sale in Numaligarh Refinery, which will be sold to state-run firms. It would also garner, though difficult to quantify, some revenues from buyback by central public sector enterprises (CPSEs). With valuation slump of 50% or thereabout in many CPSEs in the past six months means, offer for sales (OFS) of minority stakes in CPSEs such as Indian Oil or Coal India will be possible if stock prices recover in time.

Due to COVID-19 impact, the FY20 disinvestment receipts were Rs 50,300 crore or 23% lower than the revised estimate (RE) of Rs 65,000 crore. The government could not execute some of the planned transactions, including sales of minority stakes in half a dozen CPSEs, as a result of the market turmoil.