The United Progressive Alliance government plans to make its first strategic sale by divesting the Centre's 99.74 per cent stake in Central Inland Water Transport Corporation.

Following the West Bengal government's refusal to acquire the loss-making company, the shipping ministry is planning to seek the Cabinet's approval for the sell-off plan.

The West Bengal and Assam governments hold nominal equity in the corporation, the operational losses of which stood at Rs 17.5 crore (Rs 175 million) in 2003-04. Of the total paid-up capital of Rs 127.49 crore (Rs 1.27 billion), the Centre's equity in CIWTC amounts to Rs 127.21 crore (Rs 1.27 billion).

The Divestment Development: Complete Coverage

"After evaluating the prospects of the company, we concluded that CIWTC could not be revived on the back of government support and privatisation was the only option," a ministry official said.

Though privatisation of CIWTC was on the previous government's agenda also, the regime change forced the ministry to reconsider it. It first asked the Left-run West Bengal government to take over the company, but it declined to do so.

The ministry, therefore, went ahead with the sell-off proposal, the official said.

"The corporation has simply proven to be a drain on the government's resources. CIWTC was not able to show any satisfactory results from the four-year restructuring programme, announced in 2001, costing Rs 140 crore (Rs 1.4 billion)," another official said.

CIWTC's had been negotiating for another revival package, when the Centre proposed handing over the reins to the West Bengal government.

As a part of the present revival package, the corporation was supposed to eliminate its operational losses, reduce manpower and sell idle assets in West Bengal and Assam in four years, a ministry official said. But the corporation had failed to utilise the funds constructively, he added.

Of the total Rs 140 crore sanctioned, the Centre was to provide a support of Rs 76.5 crore (Rs 765 million), while the rest of it was to be raised from sale of assets.

The corporation was unable to raise its own resources via sale of assets in the past four years. The Centre, in fact, pumped in more than Rs 120 crore (Rs 1.2 billion), with no perceptible result, the ministry official said.

Moreover, the Rajabagan Dockyard that was supposed to be closed down as a part of the restructuring, is still functional. The dockyard suffered operational losses of Rs 4.25 crore (Rs 42.5 million) during the last fiscal.

Revival moves

• The Centre holds 99.74% stake in Central Inland Water Transport Corporation
• The operational losses of CIWTC stood at Rs 17.5 crore in 2003-04
• The NDA government had also planned to privatise CIWTC
• The shipping ministry had to reconsider the disinvestment plan because of the change in the government at the Centre
• Despite a 4-year restructuring programme, the company failed to show satisfactory results