The Modi government has set a target of disinvestment and privatization of Rs 1.75 lakh crore for the financial year 2021-22. Apart from this, there is also a plan to collect 2.5 lakh crore rupees in the next three financial years through asset monetization of government companies. In this connection, the government is moving towards privatization very fast. The budget announced the privatization of 2 public sector banks and one insurance sector company. PM Modi himself has said that government companies that are no longer useful or not profitable, those companies will be privatized.
Meanwhile, Petroleum Secretary Tarun Kapoor, in a special conversation with Economic Times, said clearly that there is no plan to privatize GAIL right now. Only an independent TSO i.e. Transport service operator will be formed in the budget. The government has already been saying that it will keep the marketing business separate from the pipeline business. The government wants to make this Navratna company more competitive and credible. This was stated by Petroleum Minister Dharmendra Pradhan in an interview in May 2020.
Aim to double pipeline network
However, the government has now decided not to proceed on this plan. According to media reports, GAIL wants to double its pipeline network and expand it to 34000 km. It is believed that if the government will separate the marketing and pipeline businesses, the company will have a problem in raising funds from the market. Actually, separating the business will spoil the company’s balance sheet. In such a situation, the company will get money from the market at a higher rate.
Company’s monopoly in gas pipeline business
Right now GAIL operates arbitrarily in the gas pipeline business. The company owns 70 percent trunk gas pipelines on the network. The trunk gas pipeline supplies gas and crude oil from one country to another and from one state to another. GAIL is India’s largest gas supplier. In such a situation, after the formation of TSO, other companies can also come in the pipeline network business.
The government holds 51.45 percent stake
GAIL is a Navratna company. The government currently holds 51.45 per cent stake in the company. DIPAM Secretary Tuheen Kant Pandey said on Friday that the government has received Rs 747 crore from Gail Share Buyback. On February 25, Gayle had a share buyback.
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