Government May Cut Stakes In BHEL, SAIL, PowerGrid, NMDC Below 51 Per Cent, Yet Retain Management Control

Dozens of non-financial and non-strategic CPSEs that include Engineers India Ltd, PowerGrid, National Mineral Development Corporation, SAIL, BHEL, Hindustan Copper, NHPC , Hindustan Organics Chemicals Ltd are likely to be considered for reduction of government stake below 51 per cent but with the Centre retaining the management control.

Official sources said no decision has been taken on this but the names are being considered on the basis of the current government stake in them and also the nature of their operation where the private sector is already present and is largely non-strategic.

Defence and financial sector is excluded and the selection will be not en mass and will be on a case-to-case basis.

In BHEL , current government stake is 63.17 per cent and in NMDC, government holds 72.28 per cent. PowerGrid has 55.37 per cent government holding and Engineers India has 55 per cent GoI stake, Hindustan Copper has 76.05 per cent and in Steel Authority of India, government stake is 75 per cent and NHPC has 73.33 per cent stake and HOCL has 58.78 per cent stake of government.

Recently the Cabinet has approved reducing the government's stake in select PSUs to below 51 per cent while continuing to retain management control. The management control will continue to be retained with the government after considering equity held by other state-run companies in the divested firm.

Sources said the government envisages that it can bring down its stake in a public sector undertaking by roping in other state-owned entities to retain the public sector nature.

Like the sources said, if LIC or state run banks pick up stake which lowers the government holding below threshold level of 51 per cent, the companies still are majority controlled by the government.

While in Indian Oil where government currently holds 51.5 per cent in IOC and explorers Oil & Natural Gas Corporation (62.98 per cent) and Oil India Ltd (59.57 per cent) and the government can potentially sell stakes to be below 51 per cent stake but after BPCL privatisation announcement, these PSUs in the oil and gas sector may be interested to pick up BPCL's 61 per cent stake in Numaligarh Refinery.

The CCEA also gave in-principle clearance to the reduction of the government's stake in select public sector units to 51 per cent "while retaining management control on case-to-case basis, taking into account the government shareholding, and the shareholding of government-controlled institution," a finance ministry statement said.

"Post such reduction, government's control will remain intact and, while retaining the management control, on a case-to-case basis decision will be taken," Finance Minister Nirmala Sitharaman had said after the Cabinet meeting where BPCL and four other PSUs' divestment were cleared.

These companies will be shortlisted by officials and detailed approvals to be sought later. The government is considering, in case where the undertaking is still to be retained in government control, to go below 51 per cent to an appropriate level on a case-to-case basis. The government has also decided to modify the present policy of retaining 51 per cent government stake to retaining 51 per cent stake inclusive of the stake of the government controlled institutions," she had said.

Such a move is possible by amendment to Section 241 of the Companies Act. Sources said the government envisages that the government can bring down its stake in a public sector undertaking by roping in other state-owned entities to retain the public sector nature.

For example, the sources said, if LIC picks up stake which lowers the government holding below threshold level of 51 per cent, the companies still are majority controlled by the government. In her Budget Speech of 2019-20, Sitharaman had announced the government has been following the policy of disinvestment in non-financial public sector undertakings maintaining the government's stake not to go below 51 per cent.

(This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.)