Home / Companies / People /  Covid-19 has put hurdles in government’s strategic disinvestment plan: DIPAM secretary

Admitting that the coronavirus pandemic has put hurdles on government’s strategic disinvestment plans like privatizing Air India, DIPAM secretary Tuhin Kumar Pandey on Wednesday said the government remains committed to complete such transactions.

“The COVID-19 pandemic, has led to a situation where travel market is in a state of uncertainty, and restrictions on international travel due to the pandemic have put brakes on strategic disinvestment of CPSEs, like Air India, but completing the transactions remains a priority of the government," Pandey said at a webinar organized by industry lobby FICCI.

Government extended the deadline to bid for Air India for the third time last month till August 31 as the COVID-19 fallout has disrupted economic activities globally. It has also extended deadline of privatizing BPCL till 31 July.

Strategic disinvestment of Air India and BPCL is crucial for the government to achieve its disinvestment target of 2.1 trillion for 2020-21. Government missed the disinvestment target of 65,000 crore for 2019-20 by 14,701 crore as it had to defer a number of offers for sale (OFS) such as Coal India, SAIL, NMDC, PFC, IRCON and Hindustan Aeronautics planned towards the end of the financial year because of the volatility in the equity market. It completed the last deal of the financial year last week with NTPC Ltd buying government’s stakes in THDC India Ltd and North Eastern Electric Power Corp. Ltd (NEEPCO) for Rs11,500 crore.

The Centre in January invited preliminary bids to divest its entire stake in Air India, and the airline’s subsidiary Air India Express along with its joint venture Air India SATS Airport Services Private Limited. Successful bidder of Air India will be required to absorb Rs23,286.5 crore of debt after the government transfers Rs63,113 crore of debt from Air India and subsidiary Air India Express Ltd ahead of the national carrier’s proposed divestment. The government has sweetened the offer this time around. Last time, in 2018, when the Narendra Modi-led government had invited expressions of interest (EoI) to divest 76% stake in the airline, the acquirer was required to absorb Rs49,000 crore in debt.

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