CAG report on PSU selloff comes down heavily on NDA govt

New Delhi, Aug 25 (UNI) In a major embarrassment to the NDA, the Comptroller and Auditor General has said that the previous government did not follow clear norms for disinvestment of PSUs between 1999-2000 and 2002-03. This resulted in land, worth crores of rupees, remaining with the disinvested companies and liability of tax, running into over Rs 700 crore, remaining unresolved.

The report tabled in Parliament today said the government had no mechanism in place to verify and ensure that post disinvestment, the strategic partners had in fact brought in the technology and finance for turning around and improving the performance of the disinvested PSUs.

''In fact, three PSUs (MFIL, HTL and PPL) had been referred to BIFR after disinvestment. Government has also been saddled with litigation and uncertainties after investment'', the CAG report said.

It added the exercise of asset valuation did not appear to have been undertaken with due seriousness in as much as the valuers were generally not given adequate time and the core and non-core assets had not been segregated before valuation.

Altogether, the results of asset valuation did not reflect properly the replacement cost or the liquidation value of the assets.

Government did not operate any separate fund to accommodate the proceeds of disinvestment of PSUs, as intended. ''As a result, the use of these funds could not be linked to expenditure on social sector or restructuring of PSUs or retiring of public debt, which were the purposes for which the disinvestment proceeds were meant to be utilized'', the report said.

In the case of VSNL, there was delay in demerging 773.13 acres of land declared surplus out of 1230.13 acres belonging to the PSU.

Even after more than four years after disinvestment of the PSU, the suplus land was still in the custody of the disinvested company in which the strategic partner had management control.

In the case of IPCL, certain issues relating to contingent liabilities on account of deferred taxation of Rs 750 crore could not be resolved and other crucial issues of continued availability of, and cost of feedstock were resolved belatedly.

The strategic partner submitted a series of claims amounting to Rs 927.41 crore on the ground of non-disclosure of relevant information in the financial statement or in the due diligence process, which had the potential of reducing the sale proceeds of Rs 1490.84 crore realised by the Ministry by 62.20 per cent.

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