According to a three-year plan prepared by the DoD, these five public sector undertakings should be privatised this year because any delay would fetch lower prices to the government. Arguing for disinvestment in VSNL, the DoD has pointed out that with the loss of monopoly from 2004, the company would not get very good price four years down the line.

In fact, competition has already been allowed in several major areas. As a consequence, the price the government would get from VSNL would decrease with every passing year. Therefore, the sooner the better, as far as VSNL disinvestment is concerned.

Similarly, competition, which has been allowed in telephony, would bring down price of MTNL every year. With the two-tier structure in place to protect the interests of consumers, there is no reason why Mahanagar Telephone Nigam Ltd privatisation should wait, says the department of disinvestment in the three-year plan.

The DoD has mooted for a legislation for regulating the gas pipeline business. The department is of the view that this would facilitate further divestment.

The DoD has said in the plan that the privatisation of Indo Burma Petroleum and Hindustan Petroleum Corporation Limited would yield huge revenues for the government this year. Any delay would, however, bring down the value.

For, the administered price mechanism (APM) would be dismantled in 2002, and this would have a negative impact on oil companies on the block.

In the oil companies, divestment cannot wait for the sorting out of the competition and regulatory issues. The sell-off process can be concomitant to the identification of such issues.

Notwithstanding the boldness of the DoD, the ministries of communications and petroleum & natural gas are not likely to be enthused by the prospect of selling these majors. Petroleum & natural gas minister Ram Naik has already expressed his opposition to selling oil companies in no uncertain terms.

Naik's argument was that the oil sector should be granted strategic status. Though the cabinet has not accepted this assertion, it made it clear the the department of disinvestment should go ahead with the privatisation of oil majors in consultation with the ministry.

PSUs post negative growth in July
New Delhi, Aug 24: A general slowdown in engineering goods industry, particularly Bharat Heavy Electricals Ltd (Bhel) and Hindusthan Machine Tools (HMT), has affected the production performance of public sector undertakings which saw a negative growth rate of 5.14 per cent during July.

While Bharat Heavy Electricals Ltd recorded a negative growth rate of 11 per cent, HMT fared badly with an over 33 per cent negative growth rate, according to latest monthly figures released by the department of heavy industry.

Production performance of 25 PSUs fell short by 18 per cent of the targeted Rs 804.17 crore achieving Rs 658.56 crore production in July this fiscal.This was 5.14 per cent lower compared to production worth Rs 699.86 crore during the same period the previous year.

Engineering units recorded a negative growth rate of 9.01 per cent at Rs 540.69 crore as against Rs 594.25 crore in July 1999, while non-engineering ones registered a 14.81 per cent increase in production at Rs 79.83 crore in July 2000 as compared to Rs 69.53 crore achieved in same period last year.

Cumulative production was down 8.23 per cent at Rs 2514.71 crore during the first four months of current fiscal as against Rs 2747.72 crore during the corresponding period last year.

Bharat Heavy Electricals Ltd production target fell by 18 per cent at Rs 315 crore as against a target of Rs 387 crore in July 2000. This was 11.02 per cent lower than the Rs 354 crore production achieved during the same period last year.

-- PRESS TRUST OF INDIA