Govt Ex­plores Leas­ing Out Cen­tral PSEs to Pri­vate Cos

Move to en­sure cos are run as pri­vate en­ter­prises although as­set is with govt

The Economic Times - - Economy - Dheeraj.Ti­wari @times­group.com

New Delhi: The govern­ment is ex­plor­ing the pos­si­bil­ity of leas­ing out cen­tral pub­lic sec­tor com­pa­nies (CPSEs) or their as­sets to pri­vate sec­tor play­ers in an in­no­va­tion aimed at push­ing its am­bi­tious dis­in­vest­ment agenda.

A se­nior govern­ment of­fi­cial said a 99-year lease to the pri­vate sec­tor was among the op­tions be­ing con­sid­ered.

The sug­ges­tion has been in­spired by its use in the hos­pi­tal­ity busi­ness, en­sur­ing com­pa­nies are run as pri­vate en­ter­prises although the as­set re­mains with the govern­ment.

“There are var­i­ous mod­els that can be put in use to max­imise the dis­in­vest­ment re­ceipts,” he said. "In case of ho­tels, we are al­ready look­ing at such a model. This can be repli­cated in case of some other firms as well.” The govern­ment has bud­geted a rev­enue of around .₹ 56,500 crore from dis­in­vest­ment in this fis­cal, in­clud­ing .₹ 20,500 crore from strate­gic sales. The lease-out model may not be re­stricted to loss-mak­ing com­pa­nies, the of­fi­cial said, adding that if a prof­itable firm wanted to fo­cus on a core area it could sign such lease pacts with the pri­vate play­ers to get an­cil­lary sup­port.

In his Fe­bru­ary 29 bud­get, fi­nance min­is­ter Arun Jait­ley had said the govern­ment will look to lever­age the as­sets of CPSEs for the gen­er­a­tion of re­sources to in­vest in new projects. “We will en­cour­age CPSEs to di­vest in­di­vid­ual as­sets like land, man­u­fac­tur­ing units, etc. to re­lease their as­set value for mak­ing in­vest­ment in new projects. The NITI Aayog will iden­tify the CPSEs for strate­gic sale,” Jait­ley had said. The govern­ment has also re­named the dis­in­vest­ment de­part­ment as de­part­ment of in­vest­ment and pub­lic as­set man­age­ment (DIPAM) in keep­ing with its wider man­date of man­ag­ing pub­lic sec­tor as­sets.

Ac­cord­ing to an­other govern­ment of­fi­cial, in case of sick Lend­ing a Hand

A prof­itable firm keen to fo­cus on a core area may also be al­lowed to ink lease pacts to get an­cil­lary sup­port

units, the lease, re­ha­bil­i­tate and op­er­ate (LRO) model may work, es­pe­cially if the lease is for a longer du­ra­tion.

“It de­pends on the as­set which is put up for auc­tion. A lease deed can be for10 years or more, which will be based on the in­ter­est ex­pressed by pri­vate play­ers,” he said, adding that auc­tion-based leas­ing rights may also bring in more trans­parency.

Last week, NITI Aayog vicechair­man Arvind Panagariya had said it was in ad­vanced stages of iden­ti­fy­ing sick com­pa­nies and whether to close them or re­struc­ture them.

Ex­perts be­lieve that it may not be easy to find bid­ders even for the lease-op­er­ate model.

"If a pri­vate player is in­ter­ested in some state-run firm be­cause of its land bank, he may not go for the lease model. Be­sides, th­ese de­ci­sions can al­ways be ques­tioned in the courts, which can de­rail the plan of a pri­vate firm," said MP Shor­wala, a Supreme Court lawyer and in­de­pen­dent di­rec­tor at a state-run firm.

Ear­lier this year, the Supreme Court had or­dered the govern­ment to main­tain sta­tus quo on the pro­posed sale of its resid­ual stake in Hin­dus­tan Zinc Ltd.

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