 "Govt eyes public issues, ETFs as choppy markets derail disinvestment plans")
It is now left grappling with additional revenue-generating options that could include up to three initial public offerings (IPOs) of state-owned companies - Hindustan Aeronautics, RINL and THDC - and raising more money from its central public sector enterprises exchange traded fund (CPSE ETF), Business Standard has learnt.
Of the total 2015-16 budgeted estimate for disinvestment in 2015-16, Rs 41,000 crore was expected to come from minority stake sales in state-owned companies and Rs 28,500 crore from strategic sale of loss-making public sector units (PSUs) and other unviable assets like warehouses, factories, hotels and the like.
While there are positive signs regarding the former, with close to Rs 13,000 crore already garnered from stake sales in Indian Oil, Dredging Corp of India, PFC and REC, senior government sources say that strategic stake sales are off-the-table.
"The other government departments were to prepare lists of which loss-making PSUs or surplus assets to sell, the Cabinet would have decided on what to sell and what best way to sell, and then disinvestment department would have carried out the strategic sales," said a senior government official.
"However, no department has come up with names. Even the tourism ministry, which was planning to sell some hotels, has backtracked on that decision. There are unlikely to be any strategic sales this year," said the government official, adding the same had been conveyed to Finance Minister Arun Jaitley at a stock-taking meeting of the department of disinvestment (DoD) late last month.
This means that instead of focusing on just the PSU stake sales and waiting for instructions from the government for strategic sales, the DoD is left facing the full Rs 69,500 crore target on its own.
"It is unlikely that the target will be met. Now the aim is to come as close to it as possible. Apart from the planned stake sales, IPOs and further proceeds from the PSU ETF are also being considered," said another official aware of the developments.
Even Jaitley had admitted earlier this month that there may be a shortfall on disinvestment.
For IPOs, the DoD is said to be actively discussing HAL, RINL (Vizag Steel) and THDC with the respective stakeholders, including the defence ministry, Uttar Pradesh and Andhra governments. The total proceeds from the three offerings are expected to be around Rs 6,000 crore. Half of that is expected to come from the sale of stake in HAL, while RINL and THDC are expected to bring in the rest.
The proposal to sell a 10 per cent stake in HAL has been discussed for nearly three years now, while public debuts of RINL and THDC (each by sale of 10 per cent shares) were considered for 2014-15 as well. None of these plans materialised for a number of reasons and were so far on the backburner.
From the Goldman Sachs-managed CPSE ETF, the Centre plans to raise Rs 5,000 crore this year. The government had first launched a CPSE ETF, comprising scrips of 10 PSUs, in March 2014 under which retail investors have to invest a minimum of Rs 5,000 to buy units.
It had raised Rs 3,000 crore through the ETF then. The 10 PSUs, which are part of the fund basket, are Oil & Natural Gas Corp, GAIL India, Coal India, Indian Oil, Oil India, Power Finance Corp, Rural Electrification Corp, Container Corp, Engineers India and Bharat Electronics.
In spite of these options though, the DoD may still have to outstrip the Rs 41,000 crore target for PSU stake sales through the offer-for sale route. Some of the companies in which it plans to sell 5-15 per cent stake over the rest of the year include NTPC, Concor, NMDC, MMTC, National Aluminium, Bharat Electronics, Hindustan Copper and ITDC, and Coal India. Lower oil prices notwithstanding, the DoD may also push through stake sales in Oil India and ONGC towards the end of the January-march quarter.
"An ideal situation for us would be to be able to sell stake in the big two: Coal India and ONGC. But the markets remain choppy due to external pressure from China's slowdown. We are tracking the markets closely," said the second official.
At current prices, a planned 10 per stake in Coal India would garner nearly Rs 21,400 crore while a five per cent stake sale in ONGC could generate close to Rs 11,300 crore for the exchequer, a much-needed boost.
SOLD ON THE IDEA?
- FinMin looking at IPOs of HAL, RINL and THDC. Could generate nearly Rs 6,000 crore
- FinMin also considering raising Rs 5,000 crore from CPSE ETF
- Rs 28,500 crore plan for strategic sales in loss-making PSUs and unviable govt assets off-the-table
- Centre admits total divestment target of Rs 69,500 crore won't be met
- Govt was looking at divesting stake in a number of PSUs, including NTPC, NMDC, Concor, Nalco, among others
- Looking at Coal India, ONGC, Oil India and BHEL as well
- Market conditions remain choppy, being monitored closely