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CCD finalises 5-point plan to divest more PSUs

The government on Wednesday finalised a 5-point criteria for referring more non-strategic public sector undertakings to the reconstituted Divestment Commission for exploring privatisation possibilities.

This was finalised at the meeting of the Cabinet Committee on Divestment which was 'satisfied' with the privatisation process in the 58 PSUs that were gone through by the earlier Divestment Commission.

Announcing the CCD decision, Divestment Minister Arun Shourie, however, did not give the names of specific PSUs that would be taken up for divestment.

The earlier decision of the government not to privatise strategic enterprises in defence, atomic energy and railway transport will remain and all others, where the government was yet to initiate divestment process, will now be referred to the reconstituted Commission for exploring privatisation, he said.

Elaborating on the criteria for divestment, he said, the two additional qualifications now would be whether continued presence of PSUs in a particular sector was necessary for countervailing presence and if a regulatory mechanism was necessary to be put in place before the government withdrew from the sector.

IOC, ONGC and GAIL, where government had decided to retain majority stake, would not be referred to the Divestment Commission at this stage, Shourie pointed out.

As per the decision of CCD, the other criteria that would be followed include prioritising PSUs for divestment, where it led to large revenues to the government; where it could be implemented with minimum impediments in a short span of time and where continued bleeding of the government resources could be stopped more swiftly.

The commission would also be requested to keep in mind the performance and prospects for performance of PSUs and for this an important consideration would be to explore how allotment of shares to employees could be linked to performance.

"The government had decided to allot particular number of shares to employees and also taken a view on price preference for employees which was one third of the market price in preceding months of privatisation."

"We have requested the DC to see how this can be related to the performance of enterprise so that if enterprises were doing well and workers and managers are making it do better, then they should be rewarded with greater proportion of shares or better price preferences so that they can benefit because of the result of their own efforts," he said.

A final consideration, he said, would be with regard to review of the divestment processes.

"We have been continually reviewing our processes to make sure they are above criticism and to see how to compress them in order to meet the deadline and we will now submit all these procedure and processes to Divestment Commission and welcome their views," Shourie added.

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