Friday, August 12, 2022

New PSE policy: DPE to identify PSUs for privatisation in non-strategic sectors

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  • DPE will now be responsible for taking in-principle approval from CCEA for privatisation or closure of identified CPSEs in non-strategic sectors
  • DPE has also been entrusted with the task of setting up a special purpose vehicle (SPV) for asset monetisation

New Delhi: The Centre has released a new set of guidelines for the implementation of its public sector enterprise (PSE) policy and has entrusted the Department of Public Enterprises (DPE) with the responsibility of identifying PSUs for privatisation or closure in non-strategic sectors. According to the new guidelines, privatisation of PSUs in non-strategic sectors will still be undertaken by the Department of Investment and Public Asset Management (DIPAM). But the closure of PSUs in these sectors will be the DPE’s responsibility.

Privatisation of PSUs: DPE’s new powers

It must be noted that earlier in July this year, the DPE was brought under the purview of the Ministry of Finance. The government has therefore demarked the responsibilities pertaining to the disinvestment and privatisation of PSUs between DIPAM and DPE. “DPE has been entrusted with the responsibility to identify CPSEs for closure or privatisation in non-strategic sector in consultation with administrative ministries/departments and to take in-principle approval from CCEA in respect of such identified CPSEs,” the new guidelines say. In case of PSUs identified for privatisation, the process of privatisation will be taken over by DIPAM after the list of PSUs has been approved by the Cabinet. And in case of PSUs identified for closure, the process will be taken forward by DPE. 

The order added, “Besides DPE has also been entrusted with the task of setting up a special purpose vehicle (SPV) for asset monetisation once the SPV is approved by the Cabinet. DPE is also required to drive the closure process for CPSEs approved for closure, on the lines of disinvestment process being run by DIPAM.” The official order said that the new guidelines issued by the government will supersede all the PSU closure guidelines issued earlier.

Closure of non-strategic PSUs

After receiving a nod from the Cabinet Committee on Economic Affairs (CCEA) for the closure of PSUs in non-strategic sectors, the DPE will be responsible for setting up an inter-ministerial committee (IMC) comprising of DPE Secretary as Chairman, representatives of the concerned administrative ministries, DIPAM, Niti Aayog and co-opted members, if any. According to the new guidelines released by the government, a draft closure note for each PSU needs to be prepared within three months of getting a CCEA nod. Within the next two months, the draft closure note should be vetted by the IMC and forwarded to the Finance Minister for approval on case-to-case basis.

Over the next two months, the leasehold land of the PSU identified for closure should be returned to the state government, freehold land should be transferred to an SPV, Ministry of Labour and Employment should be intimated about the closure, requests for budgetary support need to be made to the Department of Expenditure, implementation of the Voluntary Retirement Scheme (VRS) for employees who are opting for it should be completed, settlement of dues, liabilities need to be undertaken and disposal of movable assets. 

“DPE will function as the secretariat for processing the policy matters to be referred to Finance Minister,” the new guidelines say.

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