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Only 4 strategic sales out of 24 PSUs, CAG slams govt

The Comptroller and Auditor General (CAG) Rajiv Mehrishi presented a report in Parliament which revealed that out of the 24 staterun public sector undertakings approved by the Cabinet for strategic stake sale, only one HPCL-ONGC deal was finalised in 2017-18. The auditor slammed the government for using exchange traded fund route for the sale.

Dec 11, 2019, 11.19 AM IST
The current Comptroller and Auditor General of India Rajiv Mehrishi
New Delhi: The national auditor has slammed the government for its inability to wrap up strategic sale in nearly two dozen companies and has also pointed flaws in SUUTI stake sale using the ETF (exchange traded fund) route.

The report of the Comptroller and Auditor General (CAG), which was tabled in Parliament, said audit revealed that out of the 24 staterun public sector undertakings approved by the Cabinet for strategic stake sale, only one HPCL-ONGC deal was finalised in 2017-18.

“The reply of DIPAM (Department of Investment and Public Asset management) indicated that out of the 24 CPSUs approved for strategic sale, only four CPSEs had been divested up to 2018-19. The target of 24 CPSEs was not even closely achieved. Further efforts on part of DIPAM and concerned administrative ministries as well as effective co-ordination between them to complete the strategic disinvestment of the remaining CPSEs, were required,” the CAG said in its report.

DIPAM in its reply to CAG has said the time required for strategic disinvestment depended on the complexities involved in the transaction and also to the extent of interest of potential bidders. The Centre has now relaunched its bid to accelerate strategic sale and officials had told TOI earlier that a political call has been taken that the government will not wait endlessly for bidders to arrive for strategic sale in loss-making PSUs and will suggest closure.

The CAG also said SUUTI holding in bluechip private companies such as L&T, Axis Bank and ITC are very liquid, good pedigree stocks. It said such profitable stocks could comfortably attract high net worth investors to fetch better and higher rate.

“These investments were included in the ETF with the intention to make the proposed basket more diversified in the new ETF.” However, an avoidable discount of Rs 170.7 crore was offered on SUUTI investments in three bluechip private companies, along with other PSU stocks to all category of investors, even to high net worth investors,” the CAG said.

“If the suggestions of department of economic affairs had been considered, it could have fetched higher valuation price for strategic disinvestment of SUUTI stocks and discount of Rs 170.7 crore, offered on attractive SUUTI stocks could have been avoided,” CAG said.

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