Selloff Formula Spins On PSU Participation, Strategic Sale

New Delhi, October 30: | Updated: Oct 31 2002, 05:30am hrs
The government is working on a compromise formula to break stalemate on the privatisation front. The two elements of the formula are: continuing with the current, preferred mode of strategic sale, while allowing public sector undertakings (PSUs) to bid for other PSUs.

According to official sources, deputy Prime Minister LK Advani will soon start meeting the ministers directly related with the privatisation controversy such as disinvestment minister Arun Shourie, petroleum & natural gas minister Ram Naik and coal & mines minister Uma Bharti. Prime Minister Atal Bihari Vajpayee wants to settle the issue as soon as possible, sources said.

Discussions to sort out the divestment issue have already started, sources said. Miss Bharti met Mr Vajpayee on Monday. The Prime Minister is also expected to meet Mr Shourie, Mr Naik, Miss Bharti and other ministers on November 3, sources said.

In order to placate Mr Shourie, who is in favour of privatisation, the compromise formula intends to keep strategic sale as the preferred mode of divestment. However, in a concession to the anti-privatisation lobby, the government in future is likely to allow PSUs bidding for other PSUs, but this would be subject to certain conditions.

The government is likely to disallow PSUs from raising debt for the purpose of acquiring other PSUs. They would be supposed to buy other PSUs from their own resources.

Allowing PSUs to bid for other PSUs has been a contentious issue between the ministry of disinvestment (MoD) and the administrative ministries.

While the former is of the opinion that allowing PSUs to participate in divestment makes a mockery of the whole process, the administrative ministries view bar on PSUs as discriminatory.