The government has said it will sell a part of its stake in Life Insurance Corporation (LIC) as it presses ahead with disinvestment, or share sale of PSUs, to tide over its fiscal troubles. Cutting stake in India’s largest insurer is expected to help the government meet its divestment target, which has been increased to Rs 2.1 lakh crore in the financial year 2021 compared with Rs 1.05 lakh crore in the current fiscal.
Tuhin Kanta Pandey, secretary,
Department of Investment and Public Asset Management (DIPAM), which oversees the government’s disinvestment programme, said share sales in at least three PSUs — Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and logistics company Container Corporation of India (Concor) — will be completed in the first half of the next financial year starting April. Below are edited excerpts of an interview:
You have got the onerous task of having to deliver on Rs 2.1 lakh crore. How are you going to be able to do it given the experience? I mean you were left with a swift target of Rs 2.05 lakh crore in this fiscal year. It’s nowhere close to that. How do you get to two?
Some of the big-ticket disinvestments that the government announced and basically they are strategic in nature, in the nature of privatisation of very large assets. BPCL is a $15 billion market cap company and CONCOR is Rs 35,000 crore and there is Shipping Corporation of India (SCI), these are very large companies. The decisions will come only in November and therefore, we are moving forward and we hope that although we may not be able to conclude that in this current financial year, they will spill over to the next year and that too in the first half of the next FY.
So you believe that all 3, that is BPCL, SCI and CONCOR, will be done in the first half of the next fiscal?
Yes.
You feel confident about being able to do that?
Yes, we are moving on that basis. Similarly, Air India expression of interest (EoI) is as well out and BPCL EoI will be out very soon. So these are the big-ticket disinvestments we are working on which will actually fructify, the actual receipts will come in the next FY. The 2.1 lakh crore - there are two parts to it as well, one is Rs 90,000 crore which is for the disinvestment of the financial sector particularly IDBI and LIC.
But is it only IDBI Bank or you are looking at any other bank as well?
Initially, the FM had announced the two, that’s LIC and IDBI. LIC is in the nature of IPO.
I was asking the economic affairs secretary on how much the government would offload in that IPO as and when it is done. What is the expectation?
That will be the structuring of the deal. We will have to value, we will have to do a lot of groundwork before we can actually do that.
What is the timeline that you are looking at as far as the LIC IPO is concerned? You were very clear that you believe SCI, BPCL and perhaps even Air India will get done in the first half of the next FY. When will we see LIC?
We have to work out on LIC with the department of financial services to prepare the structure and timeline.
And IDBI Bank?
The same. It’s the department of financial services which will be a key interlocutor with us.
Do you believe that those may take longer than companies like BPCL, for instance?
Yes, of course, because BPCL and others we have already progressed. LIC and others may require statutory changes.
On BPCL specifically, you have done the roadshows, you are hoping that the EoI will be put out very shortly. What is the feedback that you are getting that’s coming from investors?
We have sufficient interest for this company.
Outside of firms like Saudi Aramco, can you name some of the other companies who have expressed interest?
It’s not good to name because ultimately it will be through competitive bidding that we will actually discover the bidder.
When do you expect the bidding process for BPCL to take place?
We have a two-stage process. The first stage process where we have an EoI and we get to the qualified bidders and after due diligence, they participate in financial bidding. So we hope to conclude these things in the first half of the next financial year.
