In a bid to work out new ways of raising funds through asset sales, the Department of Investment and Public Asset Management (DIPAM) is weighing the possibility of reducing the government’s stake in state-run firms to below 51 per cent without ceding management control.
DIPAM is also working on a plan to monetise non-core assets such as telecom towers, oil and gas pipelines and real estate of PSUs, a top government official said. PSUs are firms where the government holds a stake of 51 per cent or more.
Biting the bullet
“If the government can bite the bullet, we can go below 51 per cent,” the official in one of the key ministries told BusinessLine . Pointing out that in most private companies the promoter holds a less than 51 per cent stake and yet enjoys management control, the officer said: “Why should a government company be different? We can also go below 51 per cent and still wield management control.
“In fact, in many of the PSUs where we are the 51 per cent shareholder, if you count the holding of LIC, GIC, SBI, etc, it will go beyond 80 per cent. Effectively, the government holds more than 80 per cent in most of the PSUs.”
In such firms, if the stake of the government along with that of the other state-run firms together comes to 51 per cent, the government can dilute its stake and still retain control over the PSU, he added.
“The government holding can even go to as low as 25 or 26 per cent while retaining management control. Maybe the law has to be changed for this reclassification of PSUs,” the official said, asking not to be named because of the sensitivity surrounding the issue.
The government has also mandated DIPAM to work out procedures for monetising non-core assets of PSUs including MTNL and BSNL, the official said.
“These are assets not used or exploited by the PSUs. It also involves monetisation of assets where there is spare capacity that can be let out to others. Such monetisation can be carried out either by the PSU concerned or through DIPAM and the proceeds will be shared in proportion to the shareholding,” he added.