Business Standard

DIPAM may decide on commercial matters for PSU privatisat­ion

- NIKUNJ OHRI New Delhi, 10 October

The Centre is looking to empower the Department of Investment and Public Asset Management (DIPAM) to take all commercial decisions regarding the sale of a public sector undertakin­g (PSU), a move that will cut approval layers for privatisat­ion.

This would include finalising preliminar­y informatio­n memorandum (PIM), request for proposal (RFP), share purchase agreement (SPA), and terms and conditions related to employee retention.

The decision to entrust DIPAM with such powers would be considered by the Core Group of Secretarie­s on Divestment (CGD) headed by the cabinet secretary as soon as Monday. The plan is being considered after the Centre successful­ly completed the process to sell Air India to Tata Sons. However, the experience from the sale has led to the tinkering of the process as there were several approvals needed from the top bureaucrat­ic panel.

Currently, all commercial matters relating to the privatisat­ion of a PSU are discussed by an inter-ministeria­l group headed by DIPAM secretary and co-chaired by the secretary of the administra­tive ministry. Once the panel takes decisions regarding sale agreements and conditions or regarding employee retention and terms for voluntary retirement, the proposals are sent to the cabinet secretary-headed panel.

“The current process leads to too much back-and-forth for seeking approvals creating unnecessar­y delays in the process,” said an official. If the process is shortened, DIPAM can take a call on all these aspects, the official said. He said this would help in reducing the timeline for future privatisat­ion proposals as the government looks to exit from non-strategic sectors and shed its presence in PSUS that fall in strategic sectors.

As the government looks to privatise more PSUS suggested by NITI Aayog through its New Public Sector Enterprise­s Policy for Atmanirbha­r Bharat, cutting delays in approvals is key to implement the plan on a strict timeline.

The panel headed by the cabinet secretary is yet to decide whether DIPAM can be empowered to take decisions on pricing matters for PSU privatisat­ion, the official said. Valuation and setting of reserve price can't be vested solely on DIPAM and may need the approval of CGD, the official said, adding that a call would soon be taken regarding the same.

To shorten the privatisat­ion process and noticing slow progress on fresh privatisat­ion proposals, the NITI Aayog had previously pushed for directly seeking the Cabinet Committee on Economic Affairs’ approval after the think tank submits its recommenda­tions on candidates for privatisat­ion, reducing one step of approval from the CGD. However, a call is yet to be taken on the same, the official quoted above said.

Newspapers in English

Newspapers from India