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Cabinet approves new mechanism to speed up strategic disinvestment

LiveMint logoLiveMint 16-08-2017 Asit Ranjan Mishra

New Delhi: To speed up strategic disinvestment transactions in central public sector enterprises (CPSEs), the Cabinet Committee on Economic Affairs (CCEA) chaired by prime minister Narendra Modi on Wednesday approved setting up of an alternative mechanism (AM).

The AM will be chaired by finance minister Arun Jaitley with minister for road transport and highways Nitin Gadkari and the minister of the administrative department as the members. The new mechanism will decide on matters relating to terms and conditions of the sale from stage of inviting of express of interests till inviting of financial bids.

The new mechanism will also empower the Core Group of Secretaries (CGD) to take policy decisions with regard to procedural issues and to consider deviations as necessary from time to time for effective implementation of decisions of CCEA.

Government has shortlisted Bharat Earth Movers Limited, Scooters India and Pawan Hans Ltd, three units of Steel Authority of India Limited (SAIL) for strategic disinvestment this year.

The government has set an ambitious target of Rs72,500 crore for disinvestment in 2017-18 including Rs 15,000 crore from strategic disinvestment. So far this year, the government has garnered around Rs10,000 crore through stake sales.

Earlier, government had set up another alternative mechanism with same composition to decide on quantum of disinvestment in case of minority stake sale in CPSEs. Jaitley is also heading another alternative mechanism to decide on privatization of the national carrier Air India. The CCEA has given in principle approval for the privatization and has asked the Jaitley panel to decide on treatment of unsustainable debt of Air India, hiving off of certain assets to a shell company, demerger and strategic disinvestment of three profit-making subsidiaries and the quantum of disinvestment and the universe of bidders.

The cabinet also approved the closure of the mostly defunct Andaman and Nicobar Islands Forest and Plantation Development Corporation Limited (ANIFPDCL) at Port Blair.

“The closure will help stop unproductive loans to ANIFPDCL from the Centr and e would enable a more productive utilization of assets,” Union finance minister Arun Jaitley said at a briefing on Wednesday.

The state-owned company was into so-called forestry activities that the Supreme Court prohibited in 2002, and has been making losses since.

According to the cabinet, the company will offer a voluntary retirement scheme (VRS) packages to willing employees and retrench the rest under the Industrial Disputes Act, 1947.

At present, there are 836 employees on the rolls of the Corporation.

The Cabinet also approved a proposal to complete the pending work of the North Koel Reservoir Project in Jharkhand and Bihar at an estimated expenditure of Rs1,622.27 crore to be incurred over three financial years from the start of the project.

It also approved the storage of water in the dam restricted at lower level than previously envisaged to reduce the submergence and to protect Betla National Park and Palamau Tiger Reserve.

“The project was started in 1972 and stopped in 1993. It will now be resumed after 30 years on a fast-track basis,” Union minister of Law Ravi Shankar Prasad said at the Cabinet briefing in New Delhi.

Mint reported in June that the project was discussed in the 15 May meeting of the standing committee of the National Board for Wildlife (NBWL), the apex wildlife body in India. It wasn’t immediately clear whether the environment ministry has signed off on the project.

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