The government has to refocus on consolidation of oil sector state-owned companies along with mergers and acquisitions of other public sector undertakings (PSUs) based on their financial strength, Neeraj Kumar Gupta, Secretary in the Department of Investments and Public Asset Management told BloombergQuint.
Finance Minister Arun Jaitley in his Budget 2017 speech said the government plans to integrate state-run oil companies, a move that could help meet the country's growing energy demands. A consolidated oil giant will be able to match the performance of international and local private companies, the minister added.
"...Based on the business profile of companies and financial strength they should look into options of backward and forward integration of them. There are upstream, midstream and downstream (oil) companies. It's logical and valuable to integrate in the value chain of the industry to have better valuation of the company. It not only mitigates the risk it also gives better dividend to stakeholders,” Gupta said.
Jaitley in his budget speech also said that the government will move ahead with the listing of the railway public sector undertakings – Indian Railway Finance Corporation (IRFC), Indian Railway Catering and Tourism Corporation (IRCTC), and Indian Railway Construction Co. Ltd (IRCON). He also said that the government will put in place a revised mechanism and procedure to ensure time-bound listing of identified Central Public Sector Enterprises (CPSEs) on stock exchanges.
Gupta reiterated that time-bound listing of CPSEs is crucial, and the guidelines for the same will soon be introduced.
Also Read: Budget 2017: Government Sets Steep Rs 72,500 Crore Disinvestment Target
In general though, the Centre's divestment policy remains the same; the government will undertake a mix of minority strategic stake sales, listing of PSUs and listing of insurance companies, he added.
When asked if the government will be able to meet its disinvestment target in the next fiscal, having fallen short in the last few fiscals, Gupta said “targets are always set as challenge and we will try our best to achieve it.”
The government hopes to raise Rs 72,500 crore in financial year 2017-18 by divesting stakes in public sector undertakings (PSUs), Finance Minister Arun Jaitley said in his Union Budget speech on Wednesday. Compared to the revised estimate of Rs 45,500 crore for financial year 2016-17, this is an increase of around 60 percent.
This financial year the government plans to achieve the target amount of Rs 72,500 crore by raising Rs 46,500 crore via minority stake sale, Rs 15,000 crore through strategic stake sale and Rs 11,000 from the listing of various insurance companies, according to information in the Budget document.
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