Union Cabinet Approves Biggest Ever Privatisation Drive
The Cabinet approved sale of government’s stake in BPCL, shipping firm SCI and onland cargo mover Concor.
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In the biggest privatisation drive ever, the Union Cabinet on Wednesday approved sale of government's stake in blue-chip oil firm BPCL, shipping firm SCI and onland cargo mover Concor as well as decided to cut shareholding in select public sector firms below 51 percent to boost revenue collections that have been hit by slowing economy.
The Cabinet Committee on Economic Affairs (CCEA) approved sale of government's entire 53.29 percent stake along with transfer of management control in the country's second-biggest state-owned refiner Bharat Petroleum Corp Ltd (BPCL) after taking out Numaligarh refinery from its fold, Finance Minister Nirmala Sitharaman told reporters.
No Specific Timeframe Mentioned
The government currently holds 54.80 percent in Concor and will retain 24 percent stake post sell-off but without any veto powers or management say, Disinvestment Secretary Tuhin Kanta Pandey said.
Besides, the government will sell its entire holding in THDC India and North Eastern Electric Power Corp Ltd (NEEPCO) to state power generator NTPC Ltd, the Finance Minister said.
The government holds 74.23 percent in THDCIL and 100 percent NEEPCO.
Pandey said the due process will be followed in privatisation and timeframe will depend on market interest.
Reducing Govt Stake in Select PSUs Below 51%
Parallelly, the Cabinet has also approved reducing government stake in select PSUs such as Indian Oil Corp (IOC) to below 51 percent while continuing to retain management control.
The management control will continue to be retained with the government after considering equity held by other state-owned companies in the divested firm.
The government, currently, holds 51.5 percent in IOC and another 25.9 percent through state-owned Life Insurance Corp of India (LIC), and explorers Oil & Natural Gas Corp (ONGC) and Oil India Ltd (OIL), and the government can potentially sell 26.4 percent for about Rs 33,000 crore.
A similar formula can also apply to ONGC and gas utility GAIL India Ltd.
The stake sales are critical for the government to meet its disinvestment target of Rs 1.05 lakh crore set for the current fiscal year.
The government's 53.29 percent stake in BPCL is worth about Rs 63,000 crore going by its closing price of Rs 544.65 on the BSE.
Last year, the government had sold its entire stake in Hindustan Petroleum Corp Ltd (HPCL) to state-owned Oil and Natural Gas Corp (ONGC) for Rs 36,915 crore.
BPCL will give buyers ready access to 14 percent of India's oil refining capacity and about one-fourth of the fuel marketing infrastructure in the world's fastest-growing energy market.
The firm operates four refineries in Mumbai, Kochi in Kerala, Bina in Madhya Pradesh and Numaligarh in Assam with a combined capacity of 38.3 million tonnes per annum, which is 15 per cent of India's total refining capacity of 249.4 million tonnes. After removing 3 million tonnes capacity of the Numaligarh refinery, the new buyer will get 35.3 million tonnes of refining capacity.
It also owns 15,177 petrol pumps and 6,011 LPG distributor agencies in the country. Besides, it has 51 LPG bottling plants. The company distributes 21 per cent of petroleum products consumed in the country by volume as of March this year. BPCL also has more than a fifth of the 250 aviation fuel stations in the country.
Govt Keen on International Energy Majors
The government is keen to get international energy majors such as Saudi Aramco, Total SA of France and ExxonMobil to operate in the downstream fuel marketing business so as to bring in greater competition.
Currently, 95 percent of retail petrol and diesel sales and near 100 percent of cooking gas (LPG) and kerosene sales are controlled by the public sector units.
India is the fastest-growing energy market in the world, where the global oil giants are keen to gain a foothold.
Sitharaman said Numaligarh Refinery will be handed over to the public sector oil company to allay concerns of the North East over privatisation move.
BPCL's equity shareholding of 61.65 percent in Numaligarh Refinery Ltd (NRL) and management control will be transferred to a Central Public Sector Enterprise (CPSE) operating in the oil and gas sector, she said.
"The resources unlocked by the strategic disinvestment of these CPSEs would be used to finance the social sector/developmental programmes of the Government benefiting the public. The unlocked resources would form part of the budget and the usage would come to scrutiny of the public," an official statment said.
"It is expected that the strategic buyer/ acquirer may bring in new management/technology/investment for the growth of these companies and may use innovative methods for their development," he added.
Cabinet Approves Import of 1.2 Lakh Tonnes Onion: FM
The Cabinet on Wednesday gave its approval to the Food Ministry's recent decision to import 1.2 lakh tonnes of onions in a bid to improve the domestic availability of the key kitchen staple and check prices.
Finance Minister Nirmala Sitharaman informed about the decision at a media briefing after the Cabinet meeting.
On November 16, Food and Consumer Affairs Minister Ram Vilas Paswan had announced that the government will import 1,00,000 tonnes of onions through state-run MMTC, which has already floated a tender for buying 4,000 tonnes of the commodity from the global market.
The government is also facilitating private imports and also relaxed phytosanitary and fumigation norms till December.
Cabinet Approves Two-Year Moratorium on Spectrum Payments for Telcos
The government on Wednesday doled out a Rs 42,000 crore relief to debt-laden telecom companies after it agreed not to take any payments for spectrum they use for the next two years.
The Union Cabinet headed by Prime Minister Narendra Modi approved giving Bharti Airtel, Vodafone Idea Ltd and Reliance Jio an option to avail of a two-year moratorium on payments they were supposed to make in yearly instalments for the spectrum bought in auctions, Finance Minister Nirmala Sitharaman said.
While the move will give Rs 42,000 crore relief to Bharti Airtel, Vodafone Idea and Reliance Jio, the government is unlikely to intervene in the Supreme Court-mandated statutory payments, top sources said.
On 24 October, the Supreme Court ordered telcos to pay as much as Rs 1.4 lakh crore in past statutory dues after considering non-telecom revenues for their calculation.
While the telcos are seeking waiver of interest and penalties on the dues and extended payment timelines instead of three months mandated by the apex court, sources said the matter was purely a legal issue and any extension or calibration can only be done only under the direction of the court.
Sitharaman said the payments for spectrum won in auction has been deferred for 2020-21 and 2021-22. It will now be equally divided over the rest of the payment term and the telcos will have to pay interest on it as well as back them with bank guarantees.
"In view of the current financial stress which is faced by major telecom service providers and pursuant to recommendation given by Committee of Secretaries, Cabinet has approved to defer receipt of the spectrum auction instalment due from the TSPs (Telecom Service Providers) for the years 2020-21 and 2021-22," she said.
(This PTI copy has been edited for clarity.)
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