JVs of public sector firms may come in govt ambit

All the companies formed by forging joint ventures (JVs) between public sector enterprises (PSEs) may come within the purview of the government as the Centre plans....

All the companies formed by forging joint ventures (JVs) between public sector enterprises (PSEs) may come within the purview of the government as the Centre plans to bring such deemed government companies in the ambit of Department of Public Enterprises (DPE). A proposal in this regard has been sent to the committee of secretaries for consideration.

Presently,many PSEs enter into joint ventures with other PSEs to reap the benefits of economies of scale,government backing and sometimes to promote regional growth.

Some important examples of such JVs are those between state-owned power company NTPC and Nuclear Power Corporation (NPCIL) for developing two nuclear reactors; between NTPC and Indian Oil Corporation for producing bio-diesel and lubricants; between CIL and NTPC,RINL,SAIL,NDMC to acquire of coal assets in India and abroad.

Similarly,NTPC and BHEL formed a JV to carry out engineering procurement construction contracts for power plants and other infrastructure projects.

Though a state-owned company is regulated by the DPE,the entity formed as the result of a JV,often called a deemed government company,does not come under the department.

The administrative control of such JVs rests with respective ministries,but policies on remuneration,wage,retirement,appointment,CSR and corporate governance are not framed by them. Such deemed government entities are also not required to enter into any memorandum of understanding (MoU) with the government regarding their targets.

The government is of the view that such deemed companies should be brought under the DPE so that there is uniformity in their policies such as those on remuneration and transparency,sources told The Indian Express.

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The sources said by brining these companies under the DPE,they would be covered by the PSE annual survey and their annual reports would be tabled in Parliament. This would translate into better monitoring of these companies.

However,PSUs are opposed to the idea. They argue

this would hamper the development of these companies

as they would get caught in red tape and other bureaucratic problems.

If the proposal is approved,many entities such as Delhi Metro Rail Corporation would be controlled by the DPE.