New Delhi : State and central government departments will not be eligible to bid for public sector units (PSUs) that are being privatized, the central government said, after several states sought to bid for them.
In a memorandum issued by the Department of Investment and Public Asset Management (DIPAM) to all ministries and government departments, it has been said that central, state or joint public sector enterprises, state governments and government-controlled co-operatives should participate in strategic disinvestment or privatization. is not permitted. of public undertakings, unless specifically approved by the Central Government.
The department said transfer of management control from government to another government organization would be against its public sector enterprise (PSE) policy, which aims to curtail its presence in public sector undertakings.
Several state governments have sought permission from the Center to participate in bids for central PSUs that have been put up for strategic disinvestment, whereby the government sells all its shares and transfers management control to a private entity.
Recently, the Kerala government wrote to Prime Minister Narendra Modi asking that the profit-making HLL Lifecare Limited, located in Thiruvananthapuram, be given to a state or state-run PSU.
Chief Minister Pinarayi Vijayan sought first right over the property and land of the public sector unit and cited principles of cooperative federalism to allow the state government to participate in the bid.
The state proposed that its entity, the Kerala State Industrial Development Corporation (KSIDC), participate in the bid, but this was not permitted.
Vijayan argued that the Preliminary Information Memorandum for Sale did not explicitly state that the state government or its entities were not allowed to participate.
A similar issue pertains to the sale of Rashtriya Ispat Nigam Limited (RINL), which has a steel plant in Visakhapatnam.
Andhra Pradesh Chief Minister YS Jagan Mohan Reddy wrote to the prime minister in February asking him to reconsider the decision, saying the state government was ready to work with the steel ministry to protect PSEs, which are directly Provides employment to 20,000 people and many more indirectly.
Plant employees have also opposed the strategic sale.
According to a central government official familiar with the matter, the debt position of states and weak profit-making potential of state-run PSUs did not make a strong case for giving CPSEs to states.
“The states do not have the funds to run their own PSUs, so there are other assets that can be privatized, but their arguments have no merit,” the official said on condition of anonymity.
In the office memorandum issued this week, DIPAM reiterated its policies on the matter and the new PSE policy.