Closure & asset sale of sick PSUs Within 15 months of Cabinet approval

NEW DELHI: The government has come out with guidelines to help sick and loss-making state-run enterprises dispose of their assets, including land, in a bid to expedite their shutdown.

Under the new framework, the administrative ministries will be required to achieve closure and sale of assets of identified firms within 15 months of Cabinet approval.

“The timelines will be suitably modified in individual cases requiring parliamentary approval,” said the guidelines issued by the Department of Public Enterprises.

ET had last month reported that such rules were being prepared. In its first report, the government’s think tank Niti Aayog had identified 26 of 74 loss-making companies for closure or winding up, five companies for long-term lease or management contract and three for merging with parent company while two were identified for maintaining status quo.

On Tuesday, Niti Aayog vice-chairman Arvind Panagariya said that the body was preparing a second list on dis-investment. The guidelines state that within three months of initiating a Cabinet proposal to close a central public sector enterprise ( CPSE), the firm will have to present an estimate on all dues including liabilities towards secured creditors and the budgetary support required for such closure.




“For all cases of closure Niti Aayog shall monitor the implementation of the decision along with prescribed time lines,” the guidelines said.

An oversight committee in Niti Aayog will monitor the implementation of such decisions, the guidelines said. In cases where land is on lease from the state government, it will be returned to the state after accounting for financial compensation if any.

In cases of freehold land, a land management agency will be appointed, nominated by the administrative ministry or the CPSE’s board, which will assist in disposal of land. The land management agency will also be a CPSE such as NBCC and will get a fee of 0.5 per cent of the value realised from disposal of such land subject to a cap of Rs 1 crore.

The agency will determine the current land use and its suitability for industrial, manufacturing or some other purposes, the guidelines said.

The land of such closed units will be first offered to the Centre, followed by another CPSE, state departments and finally state government bodies, in that particular order. In case no offer is received within six months, disposal of immovable assets will be done through a transparent auction, the guidelines said.