DIPAM may look at sale of smaller CPSEs to larger counterparts to meet FY21 disinvestment target

The disinvestment department could look at sale of smaller public sector companies to larger ones instead of privatising large CPSEs in the current financial year as the COVID-19 pandemic would make it difficult to scout for buyers.

As the fallout of the pandemic has impacted stock market valuation of companies, an official said the Department of Investment and Public Asset Management (DIPAM) will have to look for different ways to meet the steep target of Rs 1.20 lakh crore budgeted from CPSE stake sale.

"We feel it would be difficult to privatise CPSEs (central public sector enterprises) in the current scenario as going ahead also the outlook is bleak. We will have to look at the option of strategic sale of smaller CPSEs to their sector counterparts," the official said.

The department would soon internally prepare a list of entities that could be sold to other CPSEs, following which consultation could be initiated by the administrative ministries or departments, the official told PTI.

"In the current situation, it would be difficult to conduct roadshows and investor meets. Hence, CPSE stake sale through stock market like OFS (offer-for-sale) and IPOs (initial public offerings) too would be difficult this fiscal," the official added.

The process for big-ticket strategic sale of Air India and BPCL had already been set in motion but the COVID-19 outbreak has led to the government deferring bid submission deadline for these companies.

Now, the last date for submission of bids for BPCL is June 13, and for Air India, it is April 30.

The government is looking to sell its entire 53.29 per cent stake in fuel retailer Bharat Petroleum Corp Ltd (BPCL), 100 per cent in Air India and 30.80 per cent of its 54.80 per cent stake in Container Corporation of India.

Last month, the government completed the strategic disinvestment of its 74.49 per cent stake in THDC India Ltd and 100 per cent stake in North Eastern Electric Power Corp Ltd to state-owned NTPC Ltd.

It also sold 66.67 per cent in Kamrajar Port Ltd to Chennai Port Trust for Rs 2,383 crore.

In March 2019, state-owned PFC had acquired the government's 52.63 per cent stake in REC for Rs 14,500 crore.

In 2018, state-owned ONGC has acquired the government's entire 51.11 per cent stake in oil refiner HPCL for Rs 36,915 crore.