Cabinet secretary rules out distress sale of state crowns
Santanu Saikia
NEW DELHI, December 28: Cabinet Secretary TSR Subramanium has ruled out a distress sale of state-run firms' shares to meet divestment targets set by the finance ministry. There are no real compulsions, he says, to meet the collection figure of Rs 7,000 crore set by the United Front government. "We will only sell if we get the price we deserve. There is no hurry," he said.The statement comes amid intense pressure by the finance ministry to speed up the divestment plans of state-run firms in a bid to keep in check what might otherwise turn out to be a yawning fiscal deficit. Subramanium told The Financial Express that the issue of Rs 18,000-crore worth of petro bonds could await the formation of a new government. "We have to ensure that clearances are provided before March 31 as the issue of these bonds is linked to the larger question of reforms in the petroleum sector. The contingency fund can be tapped as a last resort," he said. The remark has put a question-mark on whether Indian Oil
Corporation (IOC) will be able to tap the GDR market before the end of the fiscal. A new government is expected to be in power only by mid-March, and if the petro bonds issue is kept hanging till then, IOC's divestment plans will have to be put off till 1998-99. If the issue of petro bonds is put off, IOC's balance sheets will carry a Rs 10,000-crore liability. The huge liabilities on its books will mean that the oil major will not be able to command a good scrip price in the international market. Sources say that resistance could be building up to the finance ministry's view that the petro-bonds transaction should be allowed through the contingency fund mechanism. The viability of pushing through a Rs 18,000-crore contra-entry through a presidential ordinance has been widely questioned. The ministry feels that bonds may be issued to oil companies in two tranches. This will allow Indian Oil to tap the GDR market this fiscal. Subramanium said the finance ministry had been given the go-ahead for the
Container Corporation of India (Concor) divestment plan. The divestment is expected to bring in about $200 million. The core group of secretaries on disinvestment is slated to meet this week to thrash out the divestment schedule for the rest of 1997-98. The possibility of divestment of a smaller tranche of shares in VSNL and a GDR float of Gas Authority of India (GAIL) are on the agenda. The GAIL GDR issue was withdrawn from the market in December after the indicative price fell short of the finance ministry's expectations. Vizag power plan cleared: The high-powered committee of secretaries cleared all pending issues relating to the 1000MW Vizag power project on Friday. The meeting was attended by the cabinet secretary and the secretaries of power and finance.Fuel linkages, issues relating to counter-guarantees and railway sidings have been thrashed out. The controversy on penalty clauses and assignability have been resolved, Subramanium said. "It is now entirely up to the project promoters and the
state electricity board to sign an appropriate power purchase agreement," he said.
Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.
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