Despite criticism, govt digs in heels for privatisation of Air India, BPCL

The Narendra Modi government is unmoved in its efforts to carry out the “strategic sale” of companies like Air India, Bharat Petroleum Corporation Ltd (BPCL), Container Corporation of India (Concor), and The Shipping Corporation of India (SCI), even as it faces opposition and criticism from some of its own affiliates like the Swadeshi Jagaran Manch.

“The Prime Minister’s Office has made it clear that apart from THDC, and North Eastern Electric Power Corporation (Neepco), all the other companies up for privatisation this time around are to be sold to private players. The intent is clear, the Cabinet Committee on Economic Affairs has given its approval, and we are going ahead with the process,” a top official told Business Standard on Monday.

The Department of Investment and Public Asset Management (DIPAM) is in the process of appointing transaction and legal advisors for BPCL, Concor, and SCI. It is learnt that Deloitte has been appointed transaction advisor for both BPCL and Concor privatisation. 

J Sagar Associates has been appointed legal advisor for BPCL’s privatisation while Luthra and Luthra for that of Concor. Sources said appointments for SCI will be finalised next.

Officials said the bureaucracy going ahead with the appointments was the clearest indication of the Centre’s commitment to see the deals through. 

“All such transactions are accompanied by political noise. Our aim is to follow the set procedure and ensure that the government gets the best possible value for these deals,” the person quoted above said.

The RSS-affiliated Swadeshi Jagaran Manch has called the Modi government’s strategic disinvestment of public sector enterprises an “imprudent business decision” that goes against India’s national interests.

Earlier this month, Union Finance Minister Nirmala Sitharaman announced the government would undertake strategic stake sales in five state-run enterprises, including BPCL, Concor, and SCI, along with the transfer of management control in these firms.

The Swadeshi Jagaran Manch, at its national conclave in Haridwar, questioned the strategic disinvestment in companies like BPCL and Air India. It demanded the NITI Aayog’s report on divestment of public sector undertakings be junked and said there was a need for a fresh assessment of the value and worth of the state-owned companies.

“The strategic disinvestment of public sector enterprises is not only an imprudent business decision, but is also against the national interests,” said Ashwani Mahajan, national co-convener of the body. 

“It not only denies the people of India — the real owners of public sector enterprises — the fair value of the assets and capital investments, but it also brings in unfair advantage for those who intend to buy.”

Last month, the Cabinet Committee on Economic Affairs approved the strategic disinvestment of the Centre’s entire stake in BPCL, SCI, THDC, and Neepco, and most of its stake in Concor, while giving up management control in these companies.

The Centre’s stake in THDC and Neepco will go to NTPC. All the other stakes will go to private sector suitors.

Officials from DIPAM and EY – which is the transaction advisor for Air India’s planned privatisation -  have recently held five roadshows, to pitch the national carrier, in Mumbai, Singapore and London. As reported, Indian and foreign airlines, private equity funds, and high net worth individuals have evinced interest in acquiring Air India. 

BPCL will be key to achieving the highly ambitious 2019-20 divestment target of Rs 1.05 trillion, of which only Rs 17,364 crore is met so far. The Centre’s 53.29 per cent stake is valued at around Rs 58,000 crore as of Monday, but could fetch the exchequer more than Rs 75,000 crore at a premium. 

The other two listed entities, Concor and SCI, are expected to fetch around Rs 20,817 crore if the government decides to sell its entire stake in both these companies. Interestingly, global majors in petroleum and freight segment are likely to be in race for BPCL and Concor.