Naidu Will Not Oppose Rinl Divestment Plan

Andhra Pradesh Chief Minister N Chandrababu Naidu is said to have agreed not to oppose the privatisation of Rashtriya Ispat Nigam Ltd, provided the Centre could create public awareness that the plant was not being singled out and was not the first one to be sold into private hands.

The change in Naidu's attitude came after his meeting with finance minister Yashwant Sinha on May 19 in Delhi.

Naidu is said to have mellowed down after the finance minister explained to him that privatisation was the only way to protect the jobs of over 17,000 workers and to save the Rs 8,000 crore plant from closing down.

 

At this, Naidu is said to have told Sinha that he was not against disinvestment, but the government needed to explain to the public the rationale behind the sale.

It must explain that Rashtriya Ispat was not being singled out and that it was not the first public sector unit to be put on the block. The two leaders will review the situation after four weeks.

A government official saw this as a positive development as Naidu's Telugu Desam Party colleagues had vociferously opposed the proposal in the just concluded budget session of Parliament.

Telugu Desam Party leader Yerran Naidu had put the government on the mat with the support of not only Opposition Mps, but also Mps belonging to the ruling alliance member Trinamool Congress and the MDMK. The Centre is dependent on the support of the TDP for a majority.

Naidu had demanded that the A T Kearney report be implemented by pumping in more money into the company. The report had been rejected by the finance ministry in 1999.

The proposal to disinvest 51 per cent was given by the Core Group of Secretaries two months ago.

Next month's review meeting is being considered crucial as the disinvestment ministry is yet to take a view on the recommendation of the group of secretaries.

The core group report had recommended that the company's entire accumulated losses of Rs 4,065.30 crore as on March 31, 1999, be written off by the government against the Rashtriya Ispat's share money pending allotment, preference share capital and a part of the equity to clean up its balance sheet. This would also keep the company from being referred to the Board for Industrial and Financial Reconstruction.

Following this, 51 per cent of Rashtriya Ispat equity should be sold to a strategic partner to be selected through global bidding.

Against this, the revival plan turned down by the finance ministry had suggested that the capacity of the plant be enhanced to one million tonnes with an estimated investment of Rs 1,700 crore from 1999-2000 to 2003-2004.