In its report on demand for grants of the disinvestment ministry, the standing committee said, “weak, inadequate and porous guidelines are being used to qualify and disqualify bidders”. The panel has gone on to recommend inclusion of business activities of unhealthy, unethical and unscruplous nature in the ministry’s guidelines, and questioned the case to case basis being adopted, despite a decade of exposure and exercise. Instead, it wants the government to bring an updated comprehensive policy document including guidelines for qualification and disqualification of bidders, before Parliament for approval.
In its submission to the committee last month, the disinvestment ministry had stated that “our test is national security. Therefore the guidelines do not apply for disqualification of Reliance in a bidding process”. Also, the guidelines for disqualifying were notified on July 13, 2001 after consulting the law ministry and a cross section of opinion.
The standing committee is also critical of the asset valuation guidelines especially on land valuation of the disinvested PSU. Accordingly, it has recommended modification of the guidelines for evaluation of the assets of the PSUs under consideration for disinvestment. Since land is a tangible asset which has value irrespective of whether it fetches income at a particular time, it should be valued separately and factored into the computation of the total value of the assets of the company being disinvested, the committee suggests.
Payments made for professional and special services, like those to the main advisor, legal advisor, asset valuer, environmental advisor and chartered accountants have drawn flak too. The government has adopted a casual approach with regard to allocation and re-appropriation of funds under this head, the committee feels, suggesting that the opinion of law ministry should have been sought.