The Centre on Wednesday gave in-principle approval for strategic disinvestment of the government shareholding in five public sector enterprises along with management control.
These five PSUs are Bharat Petroleum Corporation Ltd (BPCL); Shipping Corporation of India; Container Corporation of India; Tehri Hydro Power Development Corporation (THDCIL), and North Eastern Electric Power Corporation Ltd (NEEPCO).
Both THDCIL and NEEPCO will go to NTPC, which will acquire the government’s holding of 74.23 per cent and 100 per cent, respectively.
In the case of Concor, the Centre plans to sell 30.8 per cent while retaining 24 per cent.
Briefing newspersons on the Cabinet decisions, Finance Minister Nirmala Sitharaman said on Wednesday that in the case of BPCL, the government will carve out Numaligarh Refinery and ensure that the refinery will be retained by the government.
“In the case of BPCL, the strategic disinvestment will be for BPCL minus Numaligarh Refinery,” she said.
Meanwhile, the Cabinet Committee on Economic Affairs (CCEA) has also given in principle approval of bringing down government shareholding to below 51 per cent while retaining management control in select public sector enterprises.
This is a Budget announcement which is being implemented now.
Based on Wednesday’s closing price on the BSE, if the government offloads its entire stake in all the three listed companies (BPCL, Concor and SCI), it can earn over ₹84,000 crore. As of now, the government holds 53.29 per cent stake in BPCL, 63.75 per cent in Shipping Corporation and 54.8 per cent in Concor.
Strategic disinvestment means offering stake along with control and management of the company. It could be offered to a private company or even to another CPSE.
Post approval by the CCEA, the government will initiate the formal process, which includes appointment of various advisors, approval at the board and shareholders’ level, obtaining clearances from regulators, inviting bids from potential investors and, finally, completing the transaction.
An Alternative Mechanism, which is an inter Ministerial body, will decide on the timing, price and quantum of shares to be put on the block for an outright sale.
Sitharaman has already indicated that sale of BPCL will be completed by March 2020. Sale of other two is also expected to be completed soon. Sale of these companies is critical for achieving the disinvestment target of ₹1.05 lakh crore, out of which only ₹17,364.26 crore has been realised so far and there are only four months to garner the balance.