The government may miss its disinvestment target of Rs 1.05 trillion for 2019-2020 by a wide margin, as its plans to sell Bharat Petroleum Corporation (BPCL), Container Corporation of India (Concorp) and Air India are unlikely to conclude by March-end.
“Government has to respond to what the potential bidders ask for. So, sometimes they ask for time to examine the financial statements. Sometimes, they want to do a physical due diligence,” said a ministry official who didn’t want to be named.
This development comes at a time when the government’s fiscal deficit has touched 115 per cent of the Budget estimate for November, and is likely to breach the fiscal deficit target unless there is significant pick-up in revenue collection or government’s asset monetisation plans.
The government has been planning to 53.3 per cent stake in BPCL to a strategic buyer, which was valued at Rs 56,480 crore as of latest market prices on the exchanges.
The government’s 31 per cent stake in Concorp–earmarked for the strategic sale–was valued at Rs 10,724 crore as per latest market prices. The total proceeds from these sales can bring in 67,204 crore of proceeds to government exchequer, without taking into account the premium that the government can command on these assets from the strategic bidders.
The above estimate also doesn’t take into account the possible proceeds the government can extract from its sale of stake in the unlisted Air India, which incurred net losses of Rs 8,556 crore in 2018-2019 (provisionally estimated). So far, the government has managed to only realise Rs 17,364 crore from its divestment plans for 2019-2020, as against its Rs 1.05 trillion target.
In November last year, the government approved strategic stake sales in BPCL and Shipping Corporation of India (SCI), as well as 31 per cent stake sale in Concorp. At latest market prices, SCI’s 64 per cent — that is proposed for strategic sale — was valued at Rs 1,867 crore.
Source: Business Standard
