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| Govt to take up proposal for hiving off VSNL's surplus land |
| Press Trust Of India / New Delhi Aug 14, 2009, 01:02 IST |
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The government will consider a proposal to hive off 773 acres of surplus land of VSNL (now Tata Communications) into a separate company in a crucial meeting on August 26, which — if agreed upon — will give the exchequer a chance to monetise the real estate.
“We will consider a demerger or hiving off surplus land of VSNL into a resulting company, as also two other alternative proposals on the Full Telecom Commission meeting on August 26,” a senior official from the Department of Telecom said.
When contacted, Tata Communications said it would not like to comment on the matter. Earlier, Tata Communications Chairman Subodh Bhargava had said: “There are indications that the issues related to surplus land will be resolved, paving way, sooner than later, for the company to raise non-debt funding for its projects.”
The seven-year old dispute has remained unresolved since 2002, when the government decided to keep out 773 acres of surplus land owned by the company in four metros out of the sale deal entered into with the Tata Group, while divesting its equity stake in VSNL. If the decision is approved by the commission, which is an inter-ministerial policy-making body of DoT, on hiving-off the surplus land into a stand-alone company, it would clear hurdles for disposal of the land which has been stuck for long.
DoT had earlier favoured an auction of the land, but legal opinions went against it, saying unless the land is demerged first, it cannot be sold. DoT will also look at two other proposals to get the right valuations of the land, which include letting the Tatas handle the land at a market value or auction the land to a third party.
As the sell-off deal did not cover the ownership of this land at prime locations, this was later converted into a land bank in which the government owns over 51 per cent stake. According to the shareholders’ agreement between the government and the Tata group, post-disinvestment VSNL was to be de-merged into two companies — a telecom company under the control of Tatas and a second government-controlled company to administer the land, which is yet to take place.
The finance ministry had earlier said DoT could not directly dispose of VSNL’s surplus land through the auction route, without first hiving it off.
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