In what is being seen as the biggest privatisation drive in the history of independent India, the Union Cabinet has approved the sale of at least five major public sector units (PSUs). These include its majority stakes in Bharat Petroleum Corp Ltd (BPCL) and Shipping Corporation of India.
The government has also decided to cut shareholding in select public sector firms below 51 per cent to boost revenue collections that have been hit by the slowing economy.
Finance Minister Nirmala Sitharaman confirmed to reporters in New Delhi that the Cabinet Committee on Economic Affairs (CCEA) has approved sale of government's entire 53.29 per cent stake along with transfer of management control in the country's second-biggest state-owned refiner Bharat Petroleum Corp Ltd (BPCL) after taking out Numaligarh refinery from its fold.?
It also approved the sale of an entire 63.75 per cent government holding in Shipping Corp of India (SCI) and a 30.8 per cent stake in Container Corp of India (Concor).
The government currently holds 54.80 per cent in Concor and will retain 24 per cent stake post sell-off but without any veto powers or management say, Disinvestment Secretary Tuhin Kanta Pandey was quoted as saying by news agency PTI.
Besides, the government will sell its entire holding in THDC India and North Eastern Electric Power Corp Ltd (NEEPCO) to state power generator NTPC Ltd. Currently, the government holds 74.23 per cent in THDCIL and 100 per cent NEEPCO.
Finance Minister Sitharaman, however, evaded a direct reply to the timeframe for the disinvestments and if the stake sale will happen during the current fiscal year ending March 31, 2020.?
The Times of India had earlier reported that these sales will take place by March 2020, though there has been a lingering fear over the interest from private sector.?
The government currently maintains that the due process will be followed in privatisation and timeframe will depend on market interest.?
But the great Indian strategic sale is not alone. The Cabinet has also approved reducing government stake in select PSUs such as Indian Oil Corp (IOC) to below 51 per cent while continuing to retain management control.
The management control will continue to be retained with the government after considering equity held by other state-owned companies in the divested firm.?
The government, currently, holds 51.5 per cent in IOC and another 25.9 per cent through state-owned Life Insurance Corp of India (LIC), and explorers Oil & Natural Gas Corp (ONGC) and Oil India Ltd (OIL), and the government can potentially sell 26.4 per cent for about Rs 33,000 crore.
A similar formula can also apply to ONGC and gas utility GAIL India Ltd.
The stake sales are critical for the government to meet its disinvestment target of Rs 1.05 lakh crore set for the current fiscal year.
The government is keen to get international energy majors such as Saudi Aramco, Total SA of France and ExxonMobil to operate in the downstream fuel marketing business so as to bring in greater competition.
However, the Government of India faces several piercing challenges that are leading private players to tread cautiously and perhaps preventing them from investing in or buying stakes in PSUs.