The government plans to conclude the bidding process in four major PSUs -- BPCL, Shipping Corporation (SCI), Container Corporation (Concor) and BEML -- by November last as the stock market is heading to break above pre-Covid levels. Though the prices of these four PSUs are far below its pre-Covid levels, the government doesn't want to miss the opportunity as the volatility is likely to drag down the prices, said two senior executives.
The government's stake in these listed companies are aggregately valued at Rs 56,214 crore as on Friday. "However, the government is likely to get a better premium in BPCL and Concor, because of the business opportunities and assets," an executive said.
BPCL's share price is about 26 per cent below its mid-February share price. Concor (down 32 per cent), BEML (down 34 per cent) and SCI (down 13 per cent) are also yet to recover to pre-Covid levels. The government's 53 per cent stake was valued around Rs 55,000 crore in January, but it shrunk to Rs 40,000 crore in lieu with the present market capitalisation. BPCL sale is the key for the government to achieve its disinvestment target of Rs 1.2 lakh crore in this financial year.
The department of investment and public asset management (Dipam) will invite the bids for these companies. The government earlier extended the deadline for the submission of expression of interest (EoI) for the privatisation of BPCL to November 16 from September 30.
At a time when the government is exploring all the opportunities to find capital to infuse in the economy, the fundraising through disinvestment is crucial now. In this context, the officials are worried about the outcome of the BPCL bid. The reason is that the global oil companies are in dire financial crisis after the fall of crude prices and COVID-19 outbreak. Besides, they are in the process of scaling down their exposure in fossil fuel as part of decarbonisation targets. However, the government pins its hope around the recovering crude oil prices.
At the BPCL roadshows, which were held in the UK, the US and UAE in January, global oil and gas majors like Shell, Chevron, Conoco Philps, Saudi Aramco, Rosneft and Exxon Mobil had participated.
The government has also asked the Ministry of Railways to break the deadlock in license fee for the land on which Concor operates. The higher fee had halted the privatisation process. The Ministry of Railways is now in the advanced stage of framing a new land licensing fee policy for facilities built on railway land.