PMO seeks more powers to itself

New Delhi, Oct 19: Under the guise of promoting faster disinvestment, the Prime Minister's Office PMO is proposing that it be given ful...

New Delhi, Oct 19: Under the guise of promoting faster disinvestment, the Prime Minister8217;s Office PMO is proposing that it be given full and complete charge of all disinvestment, as the current method of having the administrative ministries in charge of selling off their own PSUs is slowing down matters considerably. The PMO is working overtime on drafting the proposal and hopes to bring the matter before the Cabinet tomorrow. The proposal is being made in the context of the fact that the government has so far realised only a fraction of its disinvestment target of Rs 10,000 crore for the year.

Other proposals likely to come up before the Cabinet are the Insurance Regulatory Authority IRA Bill, for opening up of the insurance sector to Indian joint venture firms with a maximum foreign equity of 26 per cent. If the Cabinet clears the IRA Bill, it is expected to be introduced in the winter session of Parliament.

According to the PMO, the main reason for the slow progress in divestment so far is that theadministrative ministries 8212; such as, say, the Department of Chemicals and Petrochemicals for the divestment of IPCL 8212; are not usually too keen on the divestment as this takes away their powers of patronage over the PSUs. Hence, the need to have a neutral body in charge.

The move to give the PMO sole control over divestment is, understandably, being opposed by various ministries and NDA alliance partners who feel their wings are being clipped. More important, it is facing some opposition even within the PMO, on the grounds that this will leave the PMO vulnerable to all manner of accusations of impropriety.

In the case of IPCL8217;s disinvestment, for instance, the administrative ministry, and the core group on disinvestment, have come in for a lot of flak for their decision to prevent the Indian Oil Corporation IOC from participating in the bid for IPCL. Allegations have already been made that this has been done to help some private sector bidders. Now, surely if such a decision was made under the auspicesof the PMO, the Prime Minister himself would have come under cloud.

Similarly, the method in which divestment is to be done is another aspect which is certain to lead to allegations of corruption. Currently, the two most-talked about methods to select strategic partners for PSUs are sealed bids versus open auctions. While some industrial houses are in favour of open auctions, Disinvestment Commission chief G.V. Ramakrishna his resignation is currently with the PM has openly opposed this as it favours the buyers.

To take IPCL again, let8217;s say that a potential buyer 8212; Reliance Industries or Shell or Dow Chemicals 8212; values the company at Rs 1,000 crore. In a sealed bid, these companies will obviously bid this amount. In an open auction, however, they will just have to bid one rupee more than the highest bidder.