The Modi government is expected to close the current financial year with record disinvestment receipts of over £9 billion on its stake sale in Hindustan Petroleum to ONGC. The mop-up will be almost twice the earlier record of over £4.6 billion that was achieved last year, prompting the government to eye £10 billion or more from stake sale in the next financial year. The exact amount to be raised through HPCL stake sale will be cleared over the next few weeks. It will depend on the valuation being undertaken by the PSU as well as the government. The transaction is expected to conclude before March, and will fetch the government over £3 billion, sources said.
With more than 10 weeks left for the current financial year to close, the Centre has £5.43 billion in its kitty through public offer of shares, buybacks and disinvestment of “strategic holdings” of specified undertakings of UTI, which include shares of Axis Bank, ITC and L&T. The initial public offer of two public sector general insurers - GIC and New India - have helped the government garner £1.73 billion against the budget target of £1.10 billion. While the £1.45 billion exchange traded fund has been the top grosser, GIC helped the government raise £970 million, making it the largest public sector IPO so far this year.
The fund raising is despite strategic sales not taking place till the fourth year of the BJP government’s term although over half-adozen companies, including Air India and ITDC hotels, have been in the queue. While the finance ministry is eyeing £10 billion through disinvestment in the next financial year, sources said, it will be a tough ask. “This year’s programme was started during the last financial year itself and a lot of things worked to Dipam’s (department of investment and public asset management) advantage but such a steep target may be tough to achieve,” warned an official.
With crucial state elections ahead of the 2019 general elections, the government may be wary of rushing through with strategic sales and will have to bank on public issues, buybacks and other innovative instruments to raise money. In any case, the strategic sale of companies is not going to help the government raise significant amount of money, officials said.
