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OUR INFRASTRUCTURE BUREAU
New Delhi, Jan. 13: The union cabinet on Wednesday decided to sell some of the Government's equity in six ''cash-rich'' public-sector undertakings (PSUs) either to the companies themselves or directly to fellow PSUs.
The Centre proposed to sell 12.5 per cent of its 96 per cent holding in the Oil and Natural Gas Corporation (ONGC), 10 per cent of its holding in Indian Oil Corporation (IOC), and another 10 per cent stake in the Gas Authority of India (Gail). It has decided to sell 5 per cent of its shareholding in Mahanagar Telephone Nigam Ltd (MTNL) and Videsh Sanchar Nigam Ltd (VSNL) either to the companies through buyback or to other PSUs.
The cabinet also decided to sell a part of its stake in National Aluminium Company (Nalco). Official sources said that no decision was taken as yet on the amount the Government wished to divest in Nalco.
Giving details of the crossholding scheme, finance-ministry sources said that part of the Government equity in six cash-rich PSUs, including IOC and ONGC, would be sold through buyback or crossholding to net around Rs 5,800 crore.
The official sources felt that the final decision on the nature of the crossholdings within the six chosen PSUs may depend on a group of ministers, comprising the union finance minister, industry minister and the minister of the administrative ministry of the PSU in question.
At present, the Government holding in IOC and Gail is 91 per cent and 96 per cent respectively. It has so far disinvested 12.8 per cent in Nalco, bringing down its holding in the largest aluminium producer in the country to 87.2 per cent.
The group of ministers will also decide the price at which the PSU shares will be sold back, either to the companies themselves or to fellow PSUs. It will be guided by the core group of secretaries on disinvestment. The Centre had targeted mopping up Rs 5,000 crore through sale of it equity in PSUs. It decided to opt for share buyback last month, compelling PSUs to buy the Government stake in their own companies.
The proposal ran into rough weather when the Government-owned companies, especially the national oil firms, said that the buyback norms allowed by company law would bring down the PSUs' net worth. The ordinance on buy-back stipulates that shares bought back be extinguished.
The three national oil companies identified for buyback had subsequently proposed crossholdings. The official sources could not confirm whether the decisions of the company boards were the last word on the proposed crossholdings.
Some sources felt that the cabinet committee on disinvestment would have a say in the pattern of the crossholdings.
IOC chairman MA Pathan said he was unaware of the cabinet decision. At the oil industry mega fair Petrotech last week, however, Pathan had confirmed his company's board's decision to enter into crossholdings with ONGC and Gail. IOC had proposed buying Rs 2,700 crore worth of shares in ONGC and Rs 700 crore worth of shares in Gail.
Reserves may be hit
Effectively, buyback will mean depletion of reserves. Public-sector units will tap their reserves to pay the Government and destroy the acquired shares.
In crossholdings, PSUs will buy one another's shares from the Government. This too will involve dipping into the reserves. (In both cases, PSUs may have to resort to high-cost borrowings). In buyback, the proportion of shares held by the Government will decline. In crossholdings, ownership will pass on to the PSUs with a consequent decline in the proportion of shares held by the Government.
If Government ownership falls below 50 per cent --by persistently resorting to Sinha-style disinvestment --PSUs will move out of parliamentary supervision, and crossholdings -- which keep the public out of PSU equity ownership --will put the PSUs firmly under the control of the bureaucrats of the administrative ministries. The PSUs will be free from accountability. This is sham disinvestment. Through it, babudom will lord our the PSU empire.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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