The Hindu Business Line : Divestment panel favours splitting of Central Warehousing Corpn — Says no to sale of Numaligarh Refinery for now

Industry & Economy - Disinvestment

Divestment panel favours splitting of Central Warehousing Corpn — Says no to sale of Numaligarh Refinery for now

P. Manoj

New Delhi , April 8

THE Disinvestment Commission has recommended splitting of Central Warehousing Corporation (CWC) into several companies as a prelude to its privatisation. The panel, however, said that there was no case for immediate disinvestment of Numaligarh Refinery Ltd.

In a recent report submitted to the Government, the Commission suggested splitting CWC into 20 companies with three of them taking over the assets of CWC along its major lines of business while the remaining 17 could take over the stake held by CWC in state warehousing corporations (SWCs). The CWC holds 50 per cent stake in as many as 17 state warehousing corporations across the country.

It also recommended transfer of assets and liabilities of CWC and SWCs to newly formed companies following which the entire Government equity in two companies dealing with general and port warehousing could be disinvested in favour of strategic partners.

In the case of the third company, which would deal with foodgrains, the Commission said any decision on privatisation should be taken within three years in line with the progress of private sector participation in the sector, growth of private sector warehouses besides establishment of regulatory framework.

The Commission also favoured the repeal of the Warehousing Corporations Act, 1962. The Government currently holds over 55 per cent stake in CWC in which the State Bank of India is a major shareholder with 21 per cent equity.

The CWC was set up in 1956 to prevent the forced sale of produce by farmers at low prices and currently runs 473 warehouses with a combined capacity of 92 million tonnes.

The Commission was of the view that disinvestment in Assam-based Numaligarh Refinery Ltd should not be taken up for now, though the Assam Accord under which it was established did not bar such a move.

It, however, felt that the privatisation issue should be revisited after a period of five years based on an assessment of the company's performance, its role in meeting social obligations as well as the costs involved.

The Commission has also asked the Government to examine whether NRL can be made a subsidiary of Oil India or Indian Oil Corporation after factoring advantages and disadvantages.

Given the history and sensitive nature of investment in the backward region NRL should not be closed down, though the operations of the company is unviable in the absence of Government support.

"It should be run as profitably as possible under the environmental conditions which are not very helpful," the report said.

The Commission also noted that NRL was unlikely to attract private sector interest, especially if the social obligations were imposed on private sector buyers prior to strategic sale.

More Stories on : Disinvestment | Petroleum

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page