Punjab to divest stake in 3 PSUs

Ruchika M Khanna

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Tribune News Service

Chandigarh, June 27

Punjab Chief Minister Capt Amarinder Singh has set the ball rolling for disinvesting government stake in three loss-making public sector undertakings — Punjab Communications Limited (PUNCOM),  Punjab State Industrial Development Corporation (PSIDC) and Punjab Financial Corporation (PFC). 

This is the first attempt to sell stake in PSIDC and PFC, though several attempts to sell stake in PUNCOM have been made by both the previous government of Capt Amarinder Singh and the Akali-BJP government. Initially, the proposal was only to wind up the two corporations. However, the Punjab Governance Reforms and Ethics Commission headed by KR Lakhanpal had recommended disinvestment in these three entities. 

Disinvestment would help in raising funds for capital expenditure and infrastructure development, funding social welfare schemes and improving the performance of public sector undertakings, said the report.    

The decision to disinvest government stake was taken at a Cabinet meeting on Wednesday. However, there is speculation about the three public sector undertakings being able to generate viable bids, especially when the liabilities are more than the asset base. 

Official sources said a transactional adviser will help to  identify the liabilities and asset base of each of these entities. “In case where the liabilities are more than the assets, the state government will have to chip in to clear the liabilities — which could be done either by clearing it on a lumpsum basis, or over a period of time.

The talk of disinvesting government stake or winding up has been going on for almost 15 years now. The only public sector undertaking where the Punjab government managed to sell its stake was Punjab Tractors Limited (PTL) in 2003, which finally merged with Mahindra and Mahindra in 2007. Several unsuccessful attempts have also been made to sell the state government’s share in Punjab Alkalies and Chemicals Limited (PACL). 

In his previous stint as Chief Minister, Capt Amarinder Singh had come up with a disinvestment policy, which recommended that the public sector undertakings should give a modest return of 4 per cent on the equity invested by the state government.

The three public sector undertakings, the disinvestment of which has been okayed by the Cabinet, are reportedly giving less than 1 per cent return on equity. Against this, the rate of interest on borrowings is over 9 per cent now. 

Punjab earned only Rs 4.9 crore as dividend in 2017-18 from its 50-odd public sector undertakings, while the state resources locked up in these public sector undertakings amount to Rs 7,614 crore. 

The total amount of outstanding government loans of these public sector undertakings is around Rs 25,393 crore and the unpaid loan against the government guarantee stands at 

Rs 18,312 crore approximately  as on March 31, 2018 (provisional). 

Loss-making undertakings

• PUNCOM: Punjab government holds 71.28% of equity share capital, amounting to Rs 8.57 crore. In 2017-18, corporation suffered a loss of Rs 3.81 crore, and accumulated loss (tentative) as on March 31, 2018, stood at Rs 20.53 crore
• PFC: Punjab holds 72.57% of share capital. PFC remained in profit till 1996-97. Due to high cost borrowings and stiff competition from banks, it went into red. Accumulated losses as on December 30, 2017, were Rs 275 crore
• PSIDC: Punjab government holds 100% of share capital. Liability of PSIDC towards bonds guaranteed by state government is Rs 601.06 crore and interest due as on date is Rs 143.03 crore