Strong navratnas to getfree hand for core plans

NEW DELHI: The government will give a free hand to navratna public sector undertakings (PSUs) to invest more than Rs 1,000 crore in infrastructure projects. If the company has the financial strength to go ahead with a project, the government will not object to investments of this mganitude, according to a senior government official. NTPC has alredy been allowed by the government to invest Rs 6,000 crore in a mega power project at Sasan, he said.

This means that cash reserve rich companies like BPCL, IOC, ONGC, GAIL, BHEL, etc will be allowed to invest in mega infrastructure if the project is viable and the company does not need to rely on government funds. “This freedom to invest in huge projects would be made available to all PSUs that are cash rich and not just navratnas,” the official said. This implies that cash rich PSUs like BSNL would also benefit.

Till now, PSUs were not allowed to invest large sums despite their navratna status. Now, they can now seek the government’s nod to invest upto 30% of their networth in one project alone.

NTPC, which has reserves to the tuneof Rs 41,776 crore, being allowed to pump in Rs.6,000 crore in one project is seen as the first indication of the new policy coming into play. Since the government plans seven ultra mega power projects in the next five-year plan, BHEL can also benefit from the liberal policy. The engineering PSU has Rs 6,026.89 crore cash reserves and the new policy will alllow it to invest upto Rs 1,800 crore in any major project.

Similarly, BPCL can now spend upto Rs 1,916 crore, which is 30% of its net worth on a single project. The company has cash reserves to the tune of Rs 6,388.43 crore. The amount that BPCL can spend is almost twice the Rs.1,000 crore allowed under the previous guidelines. The clause was included in the financial and functional autonomy granted to PSUs on the basis of the report of the adhoc group of experts headed by Dr Arjun Sengupta. GAIL has cash reserves to the tune of Rs 8,626 crore and it can spend upto Rs 2,587 crore in one project, the sources said.