Punjab cabinet approves disinvestment of loss making PSUs

To bridge revenue and fiscal deficits and raise funds for the cash-crunched state exchequer, the Punjab Cabinet today approved the disinvestment of three ailing PSUs.

The process of divestment of the loss-making Punjab Communications Limited (PUNCOM), Punjab Financial Corporation (PFC) and Punjab State Industrial Development Corporation (PSIDC) will be carried out by a core group of officers, to be set up under the chairmanship of the Chief Secretary, along with a Transaction Adviser.

This was revealed here by an official spokesperson after a meeting of the Cabinet, chaired by Chief Minister Amarinder Singh, which took the decision based on the recommendations of Punjab Governance Reforms and Ethics Commission (PGREC).

Besides the Chief Secretary, other members of the Core Group would include Principal Secretary Finance, Principal Secretary to Chief Minister, Administrative Secretary of the concerned Department and Managing Director of the concerned PSUs.

The committee has been mandated to make recommendations regarding the disinvestment of PSUs in Punjab, the report of which would be submitted to the Council of Ministers for final decision.

The state earned only Rs 4.90 crore as dividend in 2017-18 from its 50-odd PSUs, while the state resources locked up in these PSUs amount to Rs 7614 crore.

The total amount of outstanding government loans of these PSUs 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).

The Cabinet also noted that the Central government had collected around Rs 1 lakh crore from the strategic and non-strategic disinvestment of Central Public Sector Enterprises (CPSEs) in 2017-18, taking advantage of the market conditions.

Amongst the three PSUs to be disinvested, PUNCOM was established in 1981 and was promoted by Punjab government through Punjab Information & Communication Technology Corporation Ltd. (PICTCL) with 100 per cent equity participation.

At present, the state government holds 71.28 per cent (PICTCL and 0.08 per cent through PSIDC) of equity share capital in PUNCOM, amounting to Rs 8.57 crore.

PFC was incorporated under the State Financial Corporations Act, 1951, and came into existence on February 1, 1953 with the main objective to grant loans for the establishment of new micro, small and medium industrial concerns, modernisation and expansion of existing activities in the state.

Punjab government holds 72.57 per cent of the share capital of the corporation. The corporation remained in profit till 1996-97.

Due to high cost borrowing and stiff competition from commercial banks from 1998 onwards, the corporation moved into the red with accumulated losses as on December 30, 2017 at Rs 275 crore.

PSIDC was incorporated in 1966 to act as a catalyst for the development of large and medium scale industries in the state. Punjab government holds 100 per cent of share capital of PSIDC.

At present, the liability of PSIDC towards bonds guaranteed by the state government is Rs 601.06 crore and interest due thereon as on date is Rs 143.03 crore, thus making the total liability to be Rs 744.09 crore.