FinMin readies plan for strategic sale of unviable govt assets

Ministries to be told to prepare list of assets that can be sold

The finance ministry’s disinvestment department is likely to ask other central government ministries and departments to prepare a list of assets — companies, factories, warehouses and office buildings, among others, which are no longer viable and can be sold off — Business Standard has learnt.

Such asset divestments will be part of the Centre’s 2015-16 strategic stake sales target. The overall budgeted disinvestment target for the year is Rs 69,500 crore, of which Rs 41,000 crore is expected to be raked in from 5-15 per cent stake sales in listed public sector units (PSUs), while Rs 28,500 crore is to be raised from strategic stake sales.

Senior government sources said other ministries would be requested to follow the tourism ministry's example. The latter has identified eight loss-making hotels operated by India Tourism Development Corporation (ITDC) which can be sold off this year. A Cabinet note regarding the same is expected to be moved soon.

The assets various ministries could identify are likely to include companies on the ‘sick PSU’ list. The latest list of 65 floundering PSUs (Public Sector Units) was tabled in the Budget session of Parliament by Heavy Industries Minister Anant Geete. The list includes Air India, Fertilizer Corporation of India, Hindustan Shipyard, HMT, Mahanagar Telephone Nigam Ltd, Bharat Coking Coal and ITI.

 

Apart from PSUs, the ministries will be told to identify any asset which can be monetised, including warehouses, guest houses, office buildings and factories. The assets being identified are “basically anything which is unviable and can be sold,” said a senior government official who did not wish to be identified. “This matter is in the initial stages and it all depends on when the disinvestment department gets such lists from various ministries once they are told to prepare the same.”

The official, however, did not clarify whether there is a deadline for ministries to prepare such lists, or by when such instructions will be relayed, but said it might not be possible to sell all such assets in the current financial year.

 

The person added assets that can be sold will not include land banks. “The issue of land banks is a sensitive one, especially with the likes of defence and railways ministries.”

According to sources in the finance ministry, disinvestment officials will soon meet their counterparts in the defence ministry and in the Uttar Pradesh and Andhra governments to revive the planned initial public offerings of Hindustan Aeronautics (HAL), THDC India, and Rashtriya Ispat Nigam Ltd (RINL).

The proposal to sell a 10 per cent stake in HAL has been discussed for two years, while public debuts of RINL and THDC (each by sale of 10 per cent shares) were considered for 2014-15 as well. None of these plans materialised for a number of reasons.

As reported in Business Standard earlier, the disinvestment department has already secured approvals from the Cabinet Committee on Economic Affairs, led by Prime Minister Narendra Modi, for stake sales worth about Rs 50,000 crore (at current prices) in 20 PSUs, including Oil and Natural Gas Corporation, Power Finance Corporation, NMDC, NTPC, Nalco, BHEL, National Fertilizers, and Indian Oil, among others. While the majority of these stakes will be sold in the current financial year, some might be divested over the next two years.
MOP-UP PLAN

• FinMin to tell other ministries to identify unviable assets which can be monetised
• These could include companies on the ‘Sick PSU’ list
• Ministries may also identify other assets, like factories, warehouses, office buildings
• Possible sale of such assets to be part of strategic sales
• FY16 strategic sale target at Rs 28,500 cr; PSU disinvestment target at Rs 41,000 cr
• Land banks to not be part of any assets identified to be sold
• Tourism Ministry had already identified 8 hotels to be sold
• FinMin to start talks with DefMin, state govts for planned IPOs of HAL, RINL, THDC