Cabinet approval for strategic disinvestment of CPSEs

PIB News Update: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi has accorded ‘In-principle’ approval for strategic disinvestment in select CPSEs as per the details below:

(i)        Bharat Petroleum Corporation Ltd. (BPCL)

(a)   Strategic disinvestment of Government of India shareholding of 53.29% in Bharat Petroleum Corporation Ltd (except its equity shareholding of 61.65% in Numaligarh Refinery Limited (NRL) and management control thereon) along with transfer of management control to a strategic buyer.

(b)   Strategic disinvestment of BPCL’s shareholding of 61.65% in NRL along with transfer of management control to a Central Public Sector Enterprise (CPSE) operating in the Oil and Gas Sector.

(ii)       Shipping Corporation of India Ltd. (SCI)

Strategic disinvestment of Government of India shareholding of 63.75% in Shipping Corporation of India Ltd along with transfer of management control to a strategic buyer.

(iii)      Container Corporation of India Ltd. (CONCOR)

Strategic disinvestment of Government of India shareholding of 30.8% (out of 54 8% equity presently held by the Government of India) along with transfer of management control to a strategic buyer.

(iv)      Tehri Hydro Development Corporation India Limited (THDCIL)

Strategic disinvestment of Government of India shareholding of 74.23% in THDCIL along with transfer of management control to an identified CPSE strategic buyer, namely, NTPC.

(v)       North Eastern Electric Power Corporation Limited (NEEPCO)

Strategic disinvestment of Government of India shareholding of 100% in NEEPCO along with transfer of management control to an identified CPSE strategic buyer, namely, NTPC.

Strategic disinvestment of CPSEs will be undertaken through already established procedure and mechanism.

Benefits:

The resources unlocked by the strategic disinvestment of these CPSEs would be used to finance the social sector/developmental programmes of the Government benefiting the public. The unlocked resources would form part of the budget and the usage would come to scrutiny of the public. It is expected that the strategic buyer/ acquirer may bring in new management/technology/investment for the growth of these companies and may use innovative methods for their development.

Background:

In 2015, the Government reinitiated the policy of strategic disinvestment in order to open up sectors for private enterprise to bring efficiency in management that would contribute to general economic development. Finance Minister, in her budget speech of 2019, had also announced that in view of current macroeconomic parameters, more CPSEs will be offered for strategic disinvestment. Strategic Disinvestment is guided by the basic economic principle that the Government should discontinue its engagement in manufacturing/producing goods and services in sectors where the competitive markets have come of age, and such entities would most likely perform better in the private hands due to various factors e.g. technology up-gradation and efficient management practices; and would thus add to the GDP of the country.