Get ready for Gujarat PSU divestments

January 8, 2023 admin 3 comment Post Comment

Get ready for Gujarat PSU divestments

Now the assembly elections behind, the Gujarat Government is getting ready for large scale PSU disinvestments. Following the government of India’s policy of strategic disinvestment of public sector undertakings (PSUs), the Gujarat government has begun the process of divesting from state-run PSUs. According to the sources of Chanakya, Former Union finance secretary Hasmukh Adhia, who was recently appointed chief advisor to the chief minister, has been assigned the task of ensuring disinvestment from state-run enterprises.

During last few months, in Market Gossip column, Chanakya gave frequent hints that Adani Group may be interested in grabbing GMDC and also Gujarat Industries Power etc & suggested to accumulate those scrips. According to the sources, the funds generated through the divestment process will be used for debt restructuring and making more funds available for public projects. According to highly placed sources in the government, these PSUs are in the ports, chemicals, petroleum, gas and power sectors.

According to estimates by the state government, the market valuation of key listed state PSUs is around Rs 70,000 crore and the value of their assets is between Rs 1.5 lakh crore and Rs 3 lakh crore. The Centre’s guidelines as part of its current disinvestment policy will be followed by the state government as well. After internal consultations, the government could form an expert consultative committee to plan the finer aspects of the disinvestment.

Chanakya has prepared at a list of major State PSUs, which the private sector will be interested to grab
1) GMDC (lignite mining and two power Projects)
2) Gujarat Industires Power (Power projects)
3) Gujarat Gas (City Gas distribution)
4) GSFC & GNFC (fertilizers and Chemicals)
5) Gujarat Alkalies (Chemicals)
6) GSPL (Gas pipelines)
7) Kandla Port Trust (Modalities of disinvestment yet to be finalized)
8) Power Distribution companies e.g., Uttar Gujarat Vij company etc(may be at a later stage)
9) GEB (also at later stage)

The resources — particularly land and capital — locked into public sector enterprises may be considered wasted resources since they have been creating value at a significantly lower level than their potential as reflected in the market. State PSUs are no exception. To be consistent with the national policy, this would be the right time to consider disinvestment or privatization of most of the state PSUs in the next one or two years, except ones in the strategic sectors.

In the past five years, the state government has paid a whopping Rs 1 lakh crore in interest on its massive public debt. If the privatization exercise is completed according to plan, the state government will be freed of its debt of over Rs 3 lakh crore as well as the annual burden of paying about Rs 20,000 crore as interest on the debt.