The National Advisory Council headed by Congress President Sonia Gandhi will play a critical role in deciding the terms of reference of the Board for Reconstruction of Public Sector Enterprises.

The Prime Minister's Office has instructed the ministry of heavy industries to put up a proposal before the Union Cabinet at the earliest after consulting the NAC, senior government officials said.

The board is expected to be a seven-member body, with Heavy Industries Minister Santosh Mohan Deb as its chairman. The finance ministry earlier wanted the board under its purview.

• Sonia's letter to PM on divestment

The erstwhile divestment commission under the finance ministry will now be replaced by the BRPSE.

The NAC has proposed that the board's role should not be limited to restructuring of sick public sector enterprises and advising on preparation of revival packages for sick companies but should also be involved in preparing a roadmap for strengthening the public sector, sources said.

The board will consist of senior officials from the department of heavy industry, expenditure and petroleum and natural gas, among others. It will also include two sitting experts, a third domain expert will be a part of the board depending on the nature of the case.

In his Budget speech, Finance Minister P Chidambaram had said that the board would advise the government on the restructuring PSUs under the various ministries, including cases where divestment or closure or sale is justified.

In the light of its National Common Minimum Programme, the UPA government has pledged support to devolve full managerial and commercial autonomy for successful profit making companies operating in a competitive environment.

Senior officials said that the interests of the public sector companies will be best served by the ministry of heavy industries and public enterprise which has the maximum number of PSUs under its control and is also a nodal ministry for nearly 240 government undertakings.

Deb had earlier opposed the move to constitute the BRPSE since an informal group under the department of heavy industry had already been constituted by him.

Key role The National Advisory Council (NAC) headed by Sonia Gandhi will play a critical role in deciding the terms of reference of the BRPSE. The NAC has proposed that the Board's role should not be limited to restructuring sick PSUs but should also be involved in preparing a roadmap for strengthening the public sector.