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Wednesday, August 05, 2020

COVID-19 disrupts govt’s sell-off plans

The Market disruption caused by the Covid-19 pandemic has forced the government to extend bid deadlines multiple times for its showpiece privatisation programmes of BPCL and Air India, while stake sale of other state-owned companies are also facing delays.

Written by Sunny Verma | New Delhi | Published: July 31, 2020 4:49:58 am
air india, air india staff, air india employees, coronavirus update india, latest news The deadline to bid for purchasing government’s stake in Air India was also extended for the third time till August 31.

THE Market disruption caused by the Covid-19 pandemic has forced the government to extend bid deadlines multiple times for its showpiece privatisation programmes of BPCL and Air India, while stake sale of other state-owned companies are also facing delays. This will affect the disinvestment targets for the current year, as big-ticket stake sales may take time to materialise.

The Finance Ministry on Wednesday extended the deadline for submission of expression of interest (EOI) for its strategic stake sale in BPCL for the third time to September 30. The deadline to bid for purchasing government’s stake in Air India was also extended for the third time till August 31.

The Centre invited EOIs from interested parties with a net worth of at least $10 billion for the strategic sale of BPCL — one of the largest oil marketing and oil refining companies in India with a refining capacity of 38.3 million metric tonnes per annum or about 15 per cent of the country’s total refining capacity. Divestment of the government’s 52.98 per cent equity stake in BPCL forms a key part of its Rs 2.1-lakh crore disinvestment target for the current fiscal year.

After initiating the divestment process for national carrier in January, the government in June extended the deadline to bid for Air India by two months till August 31. The government originally started the process to sell 76 per cent in Air India in 2018, but later change strategy to sell its 100 per cent stake to attract buyers. With airlines being at the frontline of disruption caused by Covid-19, attracting buyers for the loss making national carrier at an attractive valuation will be challenging.

Department of Investment and Public Asset Management (DIPAM) said that the last date for bids for BPCL has been extended due to requests received from interested bidders and impact of Covid-19. “Normally strategic disinvestment takes 8-9 months…. To a lot of extent, Covid has put a brake on this because international travel has virtually stopped. To some extent, we have to grant extension to some of the EoIs that we have issued,” DIPAM Secretary Tuhin Kanta Pandey said on July 22.

The government had earlier extended bids for strategic sale in Central Electronics Limited. “Deadline extension does not reflect that there is no investor interest. In fact, globally central banks have injected lot of liquidity in markets at virtually zero rates, and much of it is willing to come India. While strategic stake sales will take time, we are working to speed up offer for sale in some other companies,” a senior official said. Government’s discussion with global investors during bids for Bharat Bond ETF show that there is lot of interest for investments in India, the official said.

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