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CCD decides 'in principle' to sell majority shares of 10 more PSUs

The Cabinet Committee on Divestment, or CCD, decided in principle to sell shares of ten more public sector companies and approved the annual divestment plan for the current financial year, fixed at Rs 100 billion.

However, the CCD skirted the most difficult issues, but did agree to press ahead on all fronts as far as divestment of key public sector units is concerned.

Lined up for divestment are the key organisations such as Indian Airlines, Air-India, India Tourism Development Corporation, Metals and Minerals Trading Corporation, and the State Trading Corporation.

For all these organisation, the CCD has in principle agreed that the government must divest a majority of its share. In fact, Department of Divestment Secretary Pradeep Baijal said that the government was looking at divesting from 51 per cent to 100 per cent of its shares.

The government has agreed to put up a note to the CCD on the divestment of IBP, a petroleum company, which will be discussed in the next CCD meeting.

The next CCD meet is likely on July 10.

In all the government has now targetted 17 companies for divestment, 10 of which were listed earlier. For the seven newly selected companies, the government would appoint global advisors to look into their divestment. He added that for 10 other public sector companies shortlisted earlier, the appointment of global advisors was at an advanced stage.

Speaking to the media, Divestment Minister Arun Jaitley said that the government today discussed the annual plan concerning divestment. "It will be government's endeavour to streamline divestment so that all cases slotted for divestment can be done this year," the minister said.

The government has retained its target of Rs 100 billion to be achieved by divesting off the key shares.

Divestment Secretary Baijal insisted that despite not taking any concrete decision, today's meeting was a success since the participants agreed to streamline the procedure for divestment and the CCD also expanded the list of companies from which the government would divest completely.

"Today's meeting was not supposed to specifically take action but to chart the future course," he said, "and which objective was wholly met."

Baijal clarified that no decision was taken in case of VSNL, MTNL, Bharat Heavy Electricals Limited, or BHEL, as speculated in the media.

He also said that the government has no intention to sell shares of Maruti Udyog Limited, which is a 50:50 joint venture of Suzuki of Japan and the Government of India.

Asked why MTNL, VSNL and Maruti were not discussed at the meeting, Baijal replied that since the meeting was only looking at the annual plan (April 2000-March 2001), it did not discuss these three companies which come under the government's three-year divestment plan.

Sources in the government admitted that the talks were not as fruitful as expected but pointed that incremental gains had been made. "The very fact that Petroleum Minister Ram Naik has agreed to put up a note for IBP shows that he too is conceding ground. Once the process starts, the oil majors - Indian Oil, Hindustan Petroleum, Bharat Petroleum - are just a matter of time," the sources said.

Ram Naik has been among the reluctant converts, arguing that the oil industry is of strategic importance and hence should not be privatised. Other ministers too had been fighting shy of divesting from industries under their purview, notably Paswan- MTNL and VSNL - and Joshi- Maruti.

Another problem is that while the government has been bold in announcing that global advisors will be appointed, the actual appointment is delayed beyond belief.

For instance, Anant Kumar had announced a month ago that a global advisor will be appointed for ITDC, but till date, the file has not moved from his desk, the sources said.

It thus remains to be seen whether the government will finally be able to implement its agenda of appointing global advisors given the tardiness with which the ministers of the departments concerned approach the task.

The CCD decided to appoint global advisors to initiate the divestment process in Indian Airlines, Air-India and the Shipping Corporation of India.

"The respective departments of the public sector companies have been asked to put a cabinet note at the next CCD meeting," Jaitley said.

The CCD has also asked the Petroleum Ministry to prepare a cabinet note for the sale of shares of IBP Limited, which will come up from discussion at the next meeting. The next CCD meeting is likely to be held on July 10.

The companies in which the government has decided to sell majority stakes are Hindustan Zinc Limited, Shipping Corporation of India, Hindustan Organics and Chemicals Limited, Hindustan Insecticides Limited, MMTC, STC, Sponge Iron Limited, Minerals Exploration Corporation Limited, Hotel Ashoka, Ranchi and Hotel Ashoka Utkal.

According to highly placed sources, several ministers expressed their reservations on the method of selling shares of PSUs and only cleared the divestment plan for the current year instead of three years, which was placed for discussion.

Jaitley said that besides approving the annual plan, the CCD has also streamlined the procedure for appointing global advisors and agreed that all the proposals cleared by the CCD in the past be completed within the current financial year.

Around 20 proposals of selling equity CCD has already cleared shares of public sector companies.

"The government will try to clear maximum transactions in the current year," the minister said and added that in case of ten PSUs, the government had already appointed global advisors and in case of another seven companies, global advisors would be appointed soon.

Without elaborating, he said the CCD also took several other administrative decisions.

Baijal said that the Department of Divestment had not gone for the approval of sale of specific company, instead it had sought approval for the annual plan.

"The three-year plan was not discussed by the CCD, Baijal said, and added that the CCD also did not discuss individual companies. The Petroleum Ministry has been asked to prepare a restructuring plan for the petroleum companies, he added.

As per the Divestment Commission report, the government proposes to sell majority holding of about 60 companies and with this, cases of around 30 companies have been taken up for discussion of which around 20 have been cleared and another ten have been approved in principle.

Setting a deadline for completion of the latest divestment round, the CCD decided to complete the sale of strategic stakes in Indian Airlines Limited, Air-India and others, Jaitley said.

"Ten such cases (in other firms) where decisions have already been taken were asked to go ahead and complete the divestment by the year-end," Jaitley said, and added that they include newsprint maker NEPA Limited, Bharat Aluminium Company Limited, or BALCO, Scooters India Limited, Indian Petrochemicals Corp Limited, Bharat Leather Limited, HTL, engineering firm RBT ( a part of Bharat Yantra Limited), Bharat Brakes, Hindustan Latex Limited and Hindustan Copper Limited.

Baijal said that in almost all the cases cleared so far, the CCD have approved the proposals, as recommended by Divestment Commission, with minor variation.

"The clearance of annual plan and other decisions taken by CCD today, are expected to step up the divestment process," a senior government official said. Baijal said the annual divestment plan would help streamline the process of privatisation, clarifying the means for the government to achieve its target. There have been widespread expectations that the cabinet would consider the privatisation of these three companies on Friday, heralding the start of 'big ticket' privatisation in India. Speculation was also rife that privatisation of some giant state-run oil companies, which are among the most profitable state firms in India, would also be taken up at the meeting.

The other companies, whose proposals have already been cleared are Hindustan Copper Limited - phase one, ITDC, Madras Fertilisers, Instrumentation Limited of Kota and Hindustan Cables Limited.

The meeting, presided by Prime Minister Atal Bihari Vajpayee, was attended by Heavy Industry Minister Manohar Joshi, Finance Minister Yashwant Sinha, Petroleum Minister Ram Naik, Civil Aviation Minister Sharad Yadav, Deputy Chairman of Planning Commission K C Pant, Programme Implementation Minister Arun Shourie and Divestment Minister Arun Jaitley, besides special invitee Tourism Minister Anant Kumar, Communication Minister Ram Vilas Paswan, Fertiliser and Chemicals Minister Suresh Prabhu and Steel Minister Brij Kishore Tripathy.

The CCD comprises the core members and the special invitees. The core members of the CCD are Prime Minister Atal Bihari Vajpayee (who also chairs the committee), Finance Minister Yashwant Sinha, Divestment Minister Arun Jaitley, Minister for Heavy Industries Manohar Joshi, Petroleum Minister Ram Naik, Civil Aviation Minister Sharad Yadav, Minister for Implementation Arun Shourie and Planning Commission Deputy Chairman K C Pant.

The special invitees at today's meeting were Minister for Culture Anant Kumar (who is in-charge of ITDC), Communications Minister Ram Vilas Paswan, Chemicals Minister Suresh Prabhu, and Mines and Minerals Minister B K Tripathi.

Additional inputs: UNI

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