Board for Reconstruction of PSEs gets Cabinet approval

NEW DELHI: The Union Cabinet has approved the setting up of a Board for Reconstruction of Public Sector Enterprises. It has also approved the revival package for 17 PSUs, including HMT, Andrew Yule and Heavy Engineering Corporation. This was disclosed by the Union minister for heavy industries & public enterprises, Santosh Mohan Dev.

It has also enhanced by 50%, the ex-gratia payment towards VRS in case of those PSUs which couldn’t implement the revised pay scales under the Fifth Pay Commission. For three companies — Andrew Yule, Bharat Pumps & Compressors and NEPA Ltd — the Cabinet has agreed to consider forming a JV as part of the revival package.

Mr Dev said that the Cabinet has also approved the release of outstanding statutory dues, including wages and salaries for 45,000 employees of 24 loss-making PSUs. These enterprises are under the heavy industries ministry and the decision will cost the exchequer Rs 517.4 crore. The biggest lion’s share, amounting to Rs 125 crore, will go to Heavy Engineering Corporation. Hindustan Cables will get Rs 105.1 crore, while Bharat Heavy Plate & Vessels will receive Rs 45.7 crore.

By approving the formation of the Board for Reconstruction of Public Sector Enterprises, the Manmohan Singh government has implemented one of the promises it made in its National Common Minimum Programme. However, the constitution of the Board will be determined later. It will provide inputs to the Group of Ministers on disinvestment. It will also formulate revival packages for PSUs which can be turned around.

Mr Dev said the statutory dues of employees of three PSUs — Heavy Engineering Corporation, HMT Bangalore and Hindustan Cables — would be settled in the first phase. But, their provident fund dues would be paid by December, when Parliament approves supplementary demand for grants in the Winter Session.

The Cabinet also extended till March 31, ‘05, the purchase price preference policy for PSUs. The proposal before the Cabinet was to extend the same by five years. Under this scheme, PSUs will get preferential treatment when bidding for government contracts.

Under the scheme, they will get a Rs 5 crore-handicap in case of tenders floated by government departments and other PSUs if their bids are less than 10% of the lowest bid.