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EXCLUSIVE | Government looks to kick off FY22 privatisation programme with BPCL, Air India

The finance ministry’s Department of Investment and Public Asset Management (DIPAM), the nodal body for divestment, is confident that the privatisation of BPCL and Air India can be completed by late-first quarter or early second quarter of FY22.

March 02, 2021 / 04:45 PM IST
In her Union Budget 2021-22 speech on February 1, Finance Minister Nirmala Sitharaman had set an ambitious divestment target of Rs 1.75 crore.

In her Union Budget 2021-22 speech on February 1, Finance Minister Nirmala Sitharaman had set an ambitious divestment target of Rs 1.75 crore.

 
 
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Of all the companies and assets up for divestment in FY22, the Narendra Modi government expects to begin its privatisation programme with the two biggest marquee names – Bharat Petroleum (BPCL) and Air India.

In fact, the finance ministry’s Department of Investment and Public Asset Management (DIPAM), the nodal body for divestment, is confident that the privatisation of BPCL and Air India can be completed by June-July 2021, Moneycontrol has learnt.

“The (privatisation) processes of Air India and BPCL are at a more advanced stage compared to other names, hence these will be the first off the blocks. We are targeting late-first quarter, early-second quarter to complete these deals,” a top government official said.

However, while the Centre is confident of being able to finally go big on privatisation after years of delays, there are some headwinds expected. The Bharatiya Mazdoor Sangh, RSS affiliate, has planned a phased nationwide agitation against the government's privatisation drive. The agitation is expected to go on from mid-March to mid-November.

"This is a matter for the political leadership to deal with. The top leadership in the government has given us its full backing to complete the privatisation plans," said the official.

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In her Union Budget 2021-22 speech on February 1, Finance Minister Nirmala Sitharaman had set an ambitious divestment target of Rs 1.75 crore. Unlike in the past, when the divestment pipeline leaned towards initial public offerings (IPO), offers for sale, mergers between two state-owned companies and share buybacks, the FY22 pipeline will hinge upon privatisation and asset sales.

Out of the Rs 1.75 lakh crore, Rs 75,000 crore is expected to come from the privatisation of state-owned companies, while Rs 1 lakh crore is expected to come from the sale of state-owned financial entities and the planned IPO of LIC Ltd, according to budget documents.

Officials, however, say this break-up of the coming year’s target is just on paper and rather fungible, with the aim being to achieve the headline number.

“Once we have achieved some of the key transactions that we have taken forward now, like BPCL and others, these will be the first privatisations that could take place,” DIPAM Secretary Tuhin Kanta Pandey had told Moneycontrol in a post-budget interview.

The government is learnt to have been encouraged by the interest received from prospective buyers for the two companies. For BPCL, expressions of interest (EOIs) are learnt to have been received from Vedanta Resources PLC, Apollo Global and ISquared Capital. In case of Air India, Ajay Singh of SpiceJet, Tatas, and Pawan Ruia of Ruia Group are learnt to have submitted physical EOIs.

A grouping of investment company Interups Inc and a consortium of Air India employees were also interested in bidding for the national carrier. However, Interups backed out of the bidding process.

Air India, BPCL and other candidates like Concor and Shipping Corp were part of the Centre’s FY21 divestment plan, and so was the LIC IPO. However, the COVID-19 pandemic put those plans on ice, and the government is hopeful that these long-pending plans can bear fruit.

The privatisation of Pawan Hans, NINL Ltd, two un-named state-owned banks and one un-named state-owned general insurance company is also part of the pipeline for FY22.
Arup Roychoudhury

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