Confident of privatisation of PSUs in pipeline in 2021-22: Dipam secretary

Tuhin Kanta Pandey

, secretary in the department of investment and public asset management (

Dipam

), told TOI in an exclusive interview, that privatisation of Neelachal Ispat and Central Electronics may be through during the current quarter, with the sale of BPCL and BEML likely by March, along with the mega LIC initial public offer. He stressed the annual disinvestment target should not be looked merely as a number to bridge the fiscal deficit but part of a larger agenda to revamp the public sector and sell non-core assets, given the opportunity cost of holding on to companies that are loss-making or becoming obsolete.

Excerpts of the interview:

What are your learnings from the Air India privatisation?
The last privatisation happened many years ago and since then we have been doing minority stake sales. The eight disinvestment transactions that we did were from central PSU to central PSU, with the whole process under the government’s control. Air India was a complex transaction as nothing is there, unlike even BEML or

Shipping Corporation

. Because of the entire process, we have come to grasp a lot of things better. In 2019, we changed the process so that Dipam could drive it and take a hands-off view instead of the administrative ministries running the show. We will further simplify the process as people were not pushing things earlier because they were afraid. Now, we are more confident, several policies have been settled, many of the inter-ministerial processes have been tuned. The bidders and advisors are also more aware of the process. This (transaction) will improve the climate for privatisation.

What does it mean for the other transactions such as BPCL and Shipping Corp? Will they move faster?
During the current financial year, we are looking to conclude several transactions that are running parallely — BPCL, BEML, Shipping Corp, Pawan Hans, Neelachal Ispat and Central Electronics. In the third quarter, we may be able to clinch Neelachal Ispat and Central Electronics.

Will you be able to meet the target given that LIC is also proposed to be listed? Will you look at a listing LIC overseas too?
We are looking to list it in the fourth quarter. There were suggestions for a simultaneous listing, but we will list it in India. This will fire up the Indian stock market. Money will come from all over the world and domestic money is also important with 35% meant for retail investors.

Are you also getting the pipeline ready for next year?
Some transactions will roll over to next year. For example, it will take nine months to a year for a strategic sale like IDBI Bank. We need the RBI at every step and will speak to them. We will try and bring the expression of interest by December.

What about the general insurance company that is to be privatised?
The law has been amended and now we will take it forward after discussing with the department of financial services. It will be part of next year’s pipeline.

Will NITI Aayog come out with a fresh list as part of the larger agenda for privatisation?
Yes, NITI Aayog will work in the strategic sector. They have no role in non-strategic areas because they will either be privatised or closed. The policy itself states that timing will be contingent upon the market interest, feasibility and other things. For example, look at steel. We have Neelachal Ispat, then we have

Nagarnar

plant, which will be demerged, and then, RINL. These are big steel units and you require bidders, there should be appetite. If you open four transactions at a time, then it becomes difficult.

There are a lot of loss-making PSUs which the government had identified for sale. What is the progress?
Out of the list, eight transactions have been done, four have been closed. One or two are under litigation. There are a few consulting companies. One Cement Corporation unit in Nayagaon will be dropped because there is nothing there. We will clean up the whole list. We have to be very clear that all these big fiscal targets are not supported by government equity. You have reached the 51% limit in so many companies, you can’t do anything. You can’t disinvest in Powergrid. You can’t disinvest in NTPC. It is handling 50%-60% of your power portfolio. Who has the capacity to handle this? These are strategic things, which cannot be done. We have to move away from fiscal targets and move towards reforms.

Are you suggesting delinking the disinvestment target from the fiscal deficit?
Yes. My suggestion would be that very tall target fixation just to plug the fiscal deficit, time has come to review this strategy. We should rather look at implementation of the new

PSE

policy. If I am able to conclude four or five (transactions), look at the opportunity cost.

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