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Policy on PSUs' selloff bids soon

Gaurav Raghuvanshi & P Vaidyanathan Iyer in New Delhi

The core group of secretaries on divestment on Friday decided to prepare a policy paper on whether the public sector should be kept out of the government's divestment programme.

The move follows Finance Minister Jaswant Singh's recent letter to his divestment counterpart Arun Shourie suggesting that PSUs be blocked from bidding for other state-owned enterprises.

Singh was of the opinion that barring PSUs would help in improving the market sentiment and ensure greater private sector participation.

According to divestment ministry sources, the decision whether a PSU should take part in the sell-off process should be on a case-to-case basis. In the case of petroleum companies Hindustan Petroleum Corporation and Bharat Petroleum Corporation, the ministry is of the view that other PSUs may be kept out of the race.

An immediate fall out of the proposed policy would be on the plans of Oil and Natural Gas Corporation, which is keen to diversify into the petroleum marketing business by acquiring one of the two downstream companies on the block.

The Cabinet Committee on Divestment, slated to meet early next week, is likely to delegate the responsibility of preparing the policy paper to the divestment ministry. The CCD would also seek the petroleum ministry's views on the sale of government equity in HPCL and BPCL.

Petroleum minister Ram Naik had only recently written to the Prime Minister's Office raising objections on the strategic sale of the two petroleum blue chips.

He had also sought time from the PMO to make a presentation pushing a case for an IPO preceding the strategic sale. However, the petroleum ministry would now present its point of view in the forthcoming meeting of the CCD.

Other items on the CCD agenda include clearing the transaction documents for Shipping Corporation of India Ltd where the government plans to invite final price bids for selling 51 per cent of its equity early next month.

The meeting would also deliberate on the progress made in the divestment of four ITDC hotels including Kanishka and Ranjit. The strategic partner for Ranjit hotel in the capital would be finalised based on the price bids that were received in June.

The core group of secretaries also cleared the appointment of SB Billimoria and Company as the global advisor for the strategic sale of 51 per cent government equity in Thiruvananthapuram-based Fertiliser and Chemicals Travancore.

The divestment minister told the BJP leaders that though Opposition members raised a hue and cry on the issue of privatisation and divestment, there was a "consensus in practice if not in words" across the political spectrum on the issue, party sources said.

Shourie said the Congress Government in Punjab has invited bids for sale of four PSUs including that of the profit-making Punjab Tractors on its official website.

The Madhya Pradesh Government was in the process of divesting many of its PSUs including a profit making leading manufacturer of fibre optics. The state government has also taken a loan of Rs 100 crore (Rs 1 billion) from the World Bank for accelerating the process and funding Voluntary Retirement Scheme for employees.

The Congress Government in Karnataka was also going in for major divestment while "West Bengal was doing it under the table", he said.

Clarifying doubts about the impact of divestment on employees, he asserted, "there has been not a single case of retrenchment or violation of agreement by any of the private players so far."

"We have told them (private investors) that they are on top of the mountain. Every action of theirs will have a bearing on the entire process," he said.

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