Centre secures approval to sell stake worth ~50k cr in 20 PSUs
The finance ministry’s department of disinvestment has a pipeline of PSUs in which it plans to sell stake this financial year, as well as the next two. Government sources have told Business Standard the Cabinet Committee on Economic Affairs (CCEA), led by Prime Minister NarendraModi, has already granted approval for stake sale worth about ~50,000 crore (at current prices) in about 20 companies.
This disinvestment pipeline will be offloaded keeping in mind market conditions. To meet the ~41,000-crore public sector undertaking (PSU) stake sale target for this financial year, the biggest chunk of the planned stake sale will be carried out in FY16.
The PSUs in the pipeline range from ONGC, a five per cent stake sale in which could fetch the exchequer ~13,607 crore at current prices, to Dredging Corporation of India, in which a five per cent stake sale will fetch ~53.2 crore.
Other companies for which stake-sale approvals (for 5-15 per cent stake) are said to have been secured include Power Finance Corp, NMDC, NTPC, Nalco, BHEL, MMTC, National Fertilizers, Rashtriya Chemicals and Fertilizers, Indian Oil, Hindustan Copper, State Trading Corp, India Tourism Development Corp, Engineers India, MOIL, SJVN, and Mangalore Refinery Petrochemicals.
Rural Electrification Corp is also part of the ~50,000-crore pipeline. In April, the government divested five per cent stake in the company to kick-start the 201516 stake sale process. Companies such as ONGC and NMDC, stake-sale approvals for which were given in 2014-15 as part of that year’s divestment plan, are also part of the pipeline.
“The disinvestment department already has in place about ~50,000 crore worth of stake to be sold, for which approvals have been granted by the Cabinet. Now, all the government has to do is wait for the right market conditions and sell the stake accordingly. Not all the stake can be sold this financial year; but most will, given the ambitious target. The rest will be sold through the coming two years,” said a senior government official.
Officials say the approvals were given through multiple meetings of the CCEA and only a few of these names have been in the public domain. Sources say last week, the Cabinet approved stake sale in 10-12 PSUs, but plans for stake sale in NTPC and Indian Oil alone were reported widely. They add similar instances have happened in the case of past Cabinet meetings, too — though a bunch of companies were cleared, only a few names were in the public domain.
This practice of getting approvals en-masse is a departure from the disinvestment department’s earlier practice of seeking Cabinet and regulatory approvals on a company-by-company basis in the first half of a financial year and selling the stake in the second.
As reported by Business Standard earlier, apart from minority stake sales, the finance ministry is also reviving plans for initial public offerings (IPOs) in the case of companies such as Hindustan Aeronautics, Rashtriya Ispat Nigam Ltd, and THDC Ltd, for which it is in talks with the states and ministries concerned.
A few of these initial public offerings are likely this financial year.