Central public sector enterprises with the maharatna tag will soon receive a shot in the arm with the government planning to let them buy natural resources worth up to R25,000 crore abroad without Cabinet approval. The increase in investment power of these top CPSEs would come in handy for them in the highly competitive race for natural resources like oil, gas, coal and other minerals.
Currently, maharatnas ? which enjoy far more financial autonomy than other CPSEs ? can take investment decisions up to R5,000 crore on their own. Any investment bigger than this needs the approval of the cabinet committee on economic affairs (CCEA). Maharatna firms are ONGC, SAIL, NTPC, IOC and CIL.
The department of public enterprises (DPE) has now moved a proposal under which a committee headed by the cabinet secretary will be empowered to clear maharatna investments up to R25,000 crore meant for acquiring natural assets in foreign countries, its secretary Bhaskar Chatterjee told FE. The committee will have to take a call on such proposals within 90 days. CCEA approval won?t be needed.
?This department is going with a well-thought-out paper to finance ministry and Planning Commission to enhance investment limits for maharatnas. We want to go for a magnum increase to allow PSEs to go abroad with a deep pocket,? Chatterjee said.
However, the current upper threshold of R5,000 crore will be maintained for the companies? domestic investment proposals.
The higher spending power sans CCEA nod will be allowed only for overseas buys. The DPE proposal is expected to help these CPSEs, which are finding it difficult to compete with fund-rich Chinese firms in the acquisition of resources internationally. It is reckoned that the power to invest up to Rs 25,000 crore independent of government intervention would facilitate aggressive bidding by Indian CPSEs and help them get hold of some prized assets abroad. Apart from ONGC Videsh Ltd, other CPSEs have met with limited success in the overseas arena. A special purpose vehicle created for overseas coal and mineral assets buys ? International Coal Ventures Ltd (ICVL) ? has been evaluating properties in markets such as Australia, Brazil, Mozambique, Canada and Zimbabwe for last couple of years, with no success. Similarly, companies like NMDC and NTPC have engaged in talks with coal asset owners in the US, Indonesia and a few African countries. The world?s largest coal producer, Coal India is also in talks with US-based Peabody Energy and Massey Energy for stakes in the mines owned by these companies. ?In all these deals, the major concern for PSUs is the price of assets and ability to take quick decisions. PSUs suffer on both counts,? said an official of a maharatna PSU, asking not to be named. Apart from enhanced financial powers, the proposed empowered committee headed by the cabinet secretary will also facilitate quick decisions for companies. Against about six months taken for CCEA approval, the empowered committee will have powers to approve proposals quickly (within 90 days of application) to give a decisive edge to CPSEs. Apart from the cabinet secretary, the empowered group will have representation from the secretaries of the administrative ministry (in charge) of a PSU, its chairman and managing director, and officials of the ministries of external affairs, law and finance.