Selloff freeze hits NIF

NEW DELHI: With the fate of National Investment Fund (NIF) uncertain due to the derailment of government’s disinvestment plans, revival of sick PSUs may cost the exchequer a fortune.

The government plans another Rs 700-crore revival package for Nagaland Pulp and Paper Corporation (NPPC), which is over and above the Rs 1,800 crore already committed towards revival of PSUs like HMT Bearings, Heavy Engineering Corporation, Cement Corporation of India and BBJ Construction.

“The idea behind setting up NIF was to mobilise resources for revival through disinvestment. However, since disinvestment is on hold and the NIF has no money, revival will bleed government coffers,” a senior official told ET.

Out of the Rs 700 crore, Rs 240 crore will be used for NPPC’s capital restructuring. In effect, it will be used to wipe out debt. The balance Rs 460 crore will go towards capital expenditure and restructuring the company, in order to turn around the loss-making PSU.

The company, which came of the Board for Industrial and Financial reconstruction (BIFR) net after financial restructuring efforts has again turned sick. The revival scheme could not be put into operation due to law and order problems, poor infrastructure and the absence of banking facilities, ministry sources said.