The government's divestment target for the year looks like a bad joke now.
With the Supreme Court throwing a spanner in the divestment of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd, and Divestment Minister Arun Shourie calling for a review of the proposed privatisation of the State Trading Corporation and the Shipping Corporation of India, the divestment target of Rs 13,200 crore (Rs 132 billion) for 2003-04 seems aeons away.
So far in this fiscal, the government has garnered Rs 993 crore (Rs 9,930 million) from Maruti's public issue and Rs 18.18 crore (Rs 181.8 million) from the strategic sale of Jessop & Co to Ruia Cotex.
As per the original schedule, HPCL would have been off the roster by November and BPCL's public float had been tentatively scheduled for February next year. A couple of months ago, Prime Minister Atal Bihari Vajpayee had ruled out any work on Nalco, the other big-ticket company marked for a market offering this year.
Analysts feel that the divestment of HPCL, BPCL and Nalco would have brought in over Rs 10,000 crore (Rs 100 billion).
The divestment of National Fertilisers has run into rough weather as the price bids received for the government's 51 per cent stake in the company is less than the reserve price arrived at by Rabo Bank, the adviser for the sale.
Fertiliser Minister S S Dhindsa is also reported to be in favour of deferment in the sale of NFL for a couple of years. The course of action for NFL will be decided at the next meeting of the Cabinet Committee on Divestment on October 3.
In an election year, divestment is a cussed word and Nalco had to be sacrificed at the altar of populism. With NFL running into problems and the Supreme Court judgment on HPCL and BPCL, the divestment target will remain unmet for the fifth year in the running.
Since the divestment exercise started in 1991-92, the receipts have met the target for the year only thrice, the last one being in 1998-99.
The government adopted the strategic sale route for the first time during the sale of Modern Food to Hindustan Lever Ltd in January 2000.
Since then 11 other companies, including VSNL, CMC, IPCL and Balco have been sold to private partners.
This includes loss-making company Paradeep Phosphates, which is performing well under the new management Zuari-Chambal, and is set to break-even in the current financial year. Nineteen hotels belonging to the India Tourism Development Corporation and three of the Hotels Corporation of India have also been sold in the same way.
The net earnings from sale to private parties is almost Rs 11,000 crore (Rs 110 billion).
The government has received comments from the Divestment Commission for sale of more than 80 companies.