NEW DELHI: Even when the Finance Ministry is banking on Central Public Sector Enterprises (CPSE) to achieve the disinvestment target, pessimism has start creeping in amidst adverse global market scenario and a section of the ministry feels that meeting the target will be challenging than anticipated. “We are doing our best, but there are external factors that are not in our hands. Global scenario is not very favourable amid crude oil price hike.
I feel that if the situation persists, meeting divestment target will be far more challenging than we earlier anticipated,” a senior official from the Department of Investment and Public Asset Management (DIPAM) told The Sunday Standard. For the current fiscal, the Finance Ministry has set the target of raising `80,000 crore through divestment. So far, the government has raised more than `9,600 crore through IPOs of three CPSEs and a tranche of Bharat-22 ETF in the first six months of the fiscal.
Moving forward, the ministry is banking on mergers and acquisitions among CPSEs and share buybacks by state-run companies. However, liquidity constraints and the global scenario may be a dampener. “The last three-four months had been challenging. A liquidity constraint is another problem and global woes are not over yet. We expect the festival season will improve the sentiment, but if it fails to revive the market, it will be a difficult road ahead. So, do not expect any IPO,” the official said.
The Centre is looking forward to acquiring some state-run companies with larger CPSEs, such as Power Finance Corporation (PFC) and Rural Electrification Corporation (REC). The DIPAM, in coming few days, will invite bids from merchant bankers and legal firms to handle consolidation, starting with PFC and REC, and expects to raise about Rs 14,000 crore by selling about 62-65 per cent of its stake. Also in the list is buyback of shares from about 10 CPSEs.
Last week, global financial group Macquarie also said that the Centre could miss the 2018-19 disinvestment target by 20 per cent. “Divestment has got off to a slow start, with only 10 per cent having been achieved till now. Despite the government’s confidence, there could be 20 per cent downside to its Rs 800 billion target,” Macquarie said in the note.