Govt blocks PSEs from buying state-owned cos

New Delhi: The Union Finance Ministry has barred public-sector enterprises from bidding for other Central Public-Sector Enterprises (CPSEs) which are on the block for privatisation, as it would defeat the very purpose of the disinvestment policy. Stating that transfer of management control from the government to any other government organisation or state government may continue the 'inherent inefficiencies' of State-run firms, the ministry said such transfer would defeat the very purpose of the new PSE policy.

"As a general policy, Public Sector Enterprises (PSEs) (Central /State /Joint)/ State Governments/Cooperative Societies controlled by the Governments ... are not permitted to participate in the strategic disinvestment/privatisation of other PSUs as bidders unless otherwise specifically approved by the central government in public interest," the Department of Investment and Public Asset Management (DIPAM) said.

PSEs controlled by the government include those where 51 per cent or more ownership is with the Centre/state governments or jointly with central and/or state governments. In the past, the government has sold its majority stake in certain CPSEs to public-sector companies operating in similar sectors -- which helped it meet the disinvestment target set for a particular fiscal.

In 2001-02, 74 per cent government stake in Indo Burma Petroleum Co (IBP) was sold to Indian Oil Corp (IOC) for Rs1,153 crore. More recently, in January 2018, Oil and Natural Gas Corp (ONGC) bought the government's entire 51.11 per cent stake in HPCL for Rs 36,915 crore.

In March 2019, state-owned Power Finance Corporation (PFC) had acquired the government's 52.63 per cent equity in REC for Rs 14,500 crore. As per data available, between 2000-01 to 2019-20, the government has sold its entire stake in nine CPSEs to other similarly placed public sector enterprises, garnering a cumulative Rs 53,450 crore.