Rich PSUs may not need nod for acquisitions up to Rs1k cr

NEW DELHI: Cash-rich public sector companies, especially in the oil and power sectors, could soon be given freedom to acquire other businesses valued up to Rs 1,000 crore without seeking the government’s approval.

At present, PSUs have to seek government permission every time they want to acquire another business.

A proposal to this effect is being taken to the Cabinet after being approved by a committee of secretaries, sources said.

This is also part of the UPA government’s broader commitment to give adequate autonomy to the navratna PSUs which are being strengthened as per the promise made in the coalition’s Common Minimum Programme.

Cash-rich PSUs did have some freedom to acquire other businesses in the past. But the NDA government brought in restrictive clauses which curbed the procedural freedom PSUs had to acquire other companies.

This had caused a lot of problems for ONGC’s acquisition of MRPL.

Also this is part of a larger package of autonomy that the government wants to give well-run PSUs.

These changes will give public sector oil and power companies like ONGC, IOC, NTPC and Bhel the freedom to decide their investment strategy, on commercial considerations only.

Market observers say the PSUs in the oil, power and telecom sector are sitting on massive reserves of over Rs 1,00,000 crore and may want to expand through acquisitions. If PSUs are to become global players acquisition is clearly one of the ways to go.

The government has also decided to induct professional independent directors on the board of directors of these PSUs as part of the autonomy package.

The changes are part of a wide-ranging review of the performance of public sector enterprises undertaken by the government from time to time.