Privatisation remains a priority despite Covid slowdown: DIPAM Secy

Says it is not that investors are not engaged, but they want more time. Because one thing that is not open yet is international travel

Completing existing privatisation plans, such as that of Air India, remains a priority for the government even though the Covid-19 pandemic has slowed down the process, said Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM) on Wednesday.

“Strategic disinvestment is a long-term commitment of investors and requires deep engagement. Normally it takes 8-9 months. To a large extent, Covid has put a brake on this because international travel has virtually stopped. To some extent we have to grant extension to some of the expressions of interest that we have issued. It is not that the investors are not engaged, but they want more time. Because one thing which is not open yet is international travel,” Pandey said at an event organised by industry body Ficci.

Companies that are part of the Centre’s privatization plan this year include Air India, Bharat Petroleum, Shipping Corp and Concor Ltd. As reported earlier, officials are soon expected to hold talks with interested bidders for BPCL.

Speaking about privatisation of Air India, Pandey said: “The government has updated the EOI of Air India to attract investors”. It would be significant to sell the CPSEs at the right value and build a better pipeline for strategic disinvestment so that such stake sale takes place on regular basis.”

“We restructured the EoI of Air India with deep sense of responsibility that we will be successful this time. A lot of debt restructuring was done, rationality was brought in balance sheet, concerns of investors were met in EoI. Unfortunately, Covid has led to a situation where travel and aviation markets are in a state of uncertainty, so therefore people are waiting and watching,” he said.

Pandey said that there were other major planned transactions which the centre could count upon, like the initial public offering of LIC Ltd, and called it a bold decision.

Apart from the existing privatization plans, the cabinet is soon expected to take up the proposal of ‘strategic sectors’, which was announced by Finance Minister Nirmala Sitharaman as part of the ‘Aatmanirbhar Bharat’ package. Under this proposal, the government will have four or less state-owned companies in only certain sectors, and will exit the ‘non-strategic sectors’ completely over a period of time.

Speaking on the proposal, Pandey said: “The idea is we are trying to give more space to private sector in terms of brownfield investments. Once these enterprises are strategically privatised, you will have a stronger pipeline. The government will always need resources. We have to see that we are selling at the right value. Strategic disinvestment does not disturb the market, it aids the market.”

For 2020-21, the divestment target for DIPAM is a staggering Rs 2.1 trillion, its highest ever.