Strategic Disinvestment Current Affairs - 2020

Strategic Disinvestment of BPCL and 4 other PSUs

The Cabinet of PM Narendra Modi approved disinvestment of BPCL along with Shipping Corporation of India (SCI), Container Corporation of India (CONCOR), Tehri Hydro Development Corporation India Limited (THDCIL) and North Eastern Electric Power Corporation Limited (NEEPCO). The GoI has agreed to sell its stakes in the above PSUs

Highlights

The GoI plans to sell 53.3% of its stake of BPCL, 63.8% of SCI and 30.8% of CONCOR to strategic buyers. 74.2% of its stake with THDCIL and 100% of NEEPCO is to be sold to NTPC.

In the disinvestment process the Numaligarh Refinery Limited operating under BPCL is excluded.

Disinvestment plan

The Government had set a disinvestment target of 1.05 lakh crore rupees for the financial year 2019-20. So far, it has collected 17,364 crores as on November 18, 2019. The plan was announced in the Budget session of 2019.

Significance

Disinvestments are done to reduce the financial burdens on government due to inefficient PSUs. It helps to improve public finances. It also introduces market disciplines and competition that will help in depoliticizing non-essential services.

Get these updates on Current Affairs Today Android App

BSNL Revival Plan

The Union Cabinet on October 23, 2019 approved the proposal for revival of BSNL and MTNL. It allotted the 4G spectrum to the institutions. The MTNL will act as a subsidy to BSNL. A four-step revival plan has been announced for BSNL. Also, the GoI plans to raise Rs 15,000 crore through sovereign bonds.

Significance

Both BSNL and MTNL were making losses for the state since a long time. MTNL is Mahangar Telephone Nigam Limited, a state-owned entity that provides telecom services at New Delhi and Mumbai and in Mauritius. It was founded in 1882. There are around 25,191 employees working with the company.

The BSNL loss is estimated to be around Rs 14,000 crore with a decline in revenue of Rs 19,308 crores during 2018-19. The loss of MTNL was around Rs 755 crores (in Q4, May 2019). The companies hold salary dues and pension dues for the employees. The total debts held by the companies amount to Rs 40,000 crores.

With merger under Rs 70,000 crore plan and 4G spectrum offering will help the entities in monetizing their assets. They can raise capital expenditure required to roll out the network and bring in efficiency in their operations.

Get these updates on Current Affairs Today Android App