Pranab tries to revive PSU disinvestment plan
The government on Monday announced the first tentative steps to kickstart the stalled disinvestment programme of Central public sector undertakings, reports Gaurav Choudhury.delhi Updated: Jul 07, 2009 01:14 IST
The government on Monday announced the first tentative steps to kickstart the stalled disinvestment programme of Central public sector undertakings (PSU).
Finance minister Pranab Mukherjee articulated the need for companies to raise capital without affecting the shareholding pattern of majority government-ownership. “While retaining at least 51 per cent government equity in our enterprises, I propose to encourage people’s participation in our disinvestments programme,” Mukherjee said.
“I must state clearly that public sector enterprises such as banks and insurance companies will remain in the public sector and will be given all support, including capital infusion, to grow and remain competitive,” Mukherjee said in his Budget speech.
Officials said the government plans to list profitable Central PSUs that have a net worth of over Rs 200 crore and to float an initial public offering (IPO) to carry out disinvestment of equity — either independently or in conjunction with a fresh equity issue by the company concerned.
For profitable PSUs that are already listed, the minority stake sale will be carried out either in conjunction with a public issue of fresh equity by the concerned PSU or independently by the government through an offer for sale.
There are 242 Centrally owned public sector companies, of which only 160 are profitable, 54 are making losses and 28 are still to be set up.
Among the 160 profit-making companies are 13 subsidiaries. Only 99 profit making companies have a positive net worth, while the remaining 48 companies have negative a net worth. Officials said about half of these 99 positive net-worth profit-making companies require capital to expand.
The much-awaited IPO of the state-run NHPC (formerly known as National Hydro Power Corporation) and Oil India Ltd (OIL) could well mark the resumption of the disinvestment programme.