BPCL, Air India privatisation: Govt to go ahead with disinvestment of PSUs despite opposition, protests

The Centre is firm on its plans to privatise various state-run companies including BPCL and debt-ridden Air India amid opposition from within the Sangh Parivar and protests by various organisations including employees bodies, said news reports. The Narendra Modi-led government is reportedly going ahead with the disinvestment of public sector units like Air India, Bharat Petroleum Corporation Ltd (BPCL), Container Corporation of India (Concor), and The Shipping Corporation of India (SCI) though there is opposition and criticism from Sangh Parivar affiliates like the Swadeshi Jagaran Manch (SWJ), according to a report in Business Standard. The Department of Investment and Public Asset Management (DIPAM) reportedly appointed Deloitte as transaction adviser for the sale of BPCL and Concor while J Sagar Associates is the legal adviser for SCI’s disinvestment, said the report. The Prime Minister’s Office (PMO) 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," the report said quoting a top official. [caption id=“attachment_5054011” align=“alignleft” width=“380”] Representational image. Reuters[/caption] The SJM, a political and cultural organisation affiliated to the Rashtriya Swayamsevak Sangh (RSS), reportedly raised its voice against the disinvestment policy of the Centre and said that the sale of public sector undertakings (PSUs) is not in the interest of the nation, said a report in Business Today. In the 14th National Assembly of SJM held in Haridwar recently, the Sangh Parivar affiliate reportedly said that PSUs like Air India and BPCL are essential for the strategic needs of the country and wanted it to be turned around protesting against the government’s plans for their disinvestment, the report said. The SJM termed the report on PSEs by NITI Aayog as the “handwork of a few consultants — who continue to work on the gameplan of vested interests” — and asked the government to reject the report, said a report in The Asian Age. The RSS affiliate urged the government to carry out a fresh assessment of the value of the PSUs, the report said. “The strategic disinvestment of PSEs is not only an imprudent business decision, but is also against the national interest. It not only denies the people of India — the real owners of the PSEs — the fair value of the assets and capital investments, but it also brings in unfair advantage for those who intend to buy. The SJM believes that the government has no business to be in business, but resists the plan to hand over the national assets to corporate houses or multinational corporations (MNCs) at throwaway prices,” the report said, citing the resolution passed at the SJM’s meeting in Hardwar. In the move to privatise Air India, the government is moving ahead cautiously after buyers had shown reluctance at its first attempt to divest a majority stake in the national carrier last year, said a report in Mint. As part of the stake sale, preparation is underway and it will take some time, the report said quoting an official. “Ground work is very important. The more preparation we do now, the more time we save later. What matters is closing the deal," the official was quoted as saying in the report. Fresh bids likely for 100% stake sale in Air India In October this year, the government said that it was planning to invite preliminary bids for 100 percent stake sale in Air India in November after some entities expressed interest in the national carrier. The airline is sitting on a debt pile of around Rs 58,000 crore, besides huge accumulated losses running into thousands of crores. Some entities have already expressed interest in buying Air India, the sources said, adding the Expression of Interest (EoI) document is being given the final touches. As part of efforts to clean up the balance sheet of Air India, around Rs 30,000 crore of its debt is to be repaid by way of proceeds from the issuance of bonds by its special purpose vehicle, Air India Asset Holding Ltd (AIAHL). Air India posted operating loss of Rs 4,685 crore in 2018-19 and had total debt of Rs 58,282.92 crore as on 31 March 2019, said government submissions in the Lok Sabha. Govt eyes Rs 90,000 cr through BPCL disinvestment Last month, Oil Minister Dharmendra Pradhan had hinted that public sector firms such as Indian Oil Corporation (IOC) may not be allowed to bid for buying government stake in BPCL, for which a buyer may have to shell out as much as Rs 90,000 crore. At the current trading price of BPCL, the government’s 53.29 percent stake is valued at a shade less than Rs 62,000 crore. On top of this, the acquirer will have to make an open offer to buy an additional 26 percent stake from minority shareholders for about Rs 30,000 crore. Global energy firms like Saudi Aramco, Rosneft, Kuwait Petroleum, ExxonMobil, Shell, Total SA and Abu Dhabi National Oil Co had held talks with the government for its stake in the public sector oil company. The government has 53.3 percent stake in the BPCL which the bidders may buy either on their own or through a consortium. — With inputs from agencies