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In a crucial move aimed at bridging the revenue and fiscal deficits and raising funds for the cash-crunched state exchequer, the Punjab Cabinet has approved the disinvestment of three ailing PSUs.

The process of divestment of the loss-making Punjab Communications Limited (PUNCOM), Punjab Financial Corporation (PFC) and Punjab State Industrial Development Corporation (PSIDC) will be carried out by a Core Group of Officers, to be set up under the chairmanship of the Chief Secretary, along with a Transaction Adviser.

This was disclosed here on Wednesday by an official spokesperson after a meeting of the Cabinet, chaired by Chief Minister Captain Amarinder Singh, which took the decision based on the recommendations of Punjab Governance Reforms & Ethics Commission (PGREC).

Besides the Chief Secretary, other members of the Core Group would include Principal Secretary Finance, Principal Secretary to Chief Minister, Administrative Secretary of the concerned Department and Managing Director of the concerned PSUs. Director Public Enterprises & Disinvestment would be its Member/Convener.

The committee has been mandated to make recommendations regarding the disinvestment of PSUs in Punjab, the report of which would be submitted to the Council of Ministers for final decision.

The Cabinet felt the disinvestment of the three PSUs would help in raising funds for capital expenditure and infrastructure development, funding social welfare schemes and improving the performance of PSUs by instilling professional and corporate business ethics.

It noted that the State earned only Rs.4.90 crore as dividend in 2017-18 from its 50-odd PSUs, while the state resources locked up in these PSUs amount to Rs.7614 crore. The total amount of outstanding government loans of these PSUs is around Rs.25,393 crore and the unpaid loan against the Government guarantee stands at Rs.18,312 crore approximately as on March 31, 2018 (provisional).

The Cabinet also noted that the Central government had collected around Rs.1 lakh crore from the strategic and non-strategic disinvestment of Central Public Sector Enterprises (CPSEs) in 2017-18, taking advantage of the market conditions.

Amongst the three PSUs to be disinvested, PUNCOM was established in 1981 and was promoted by Punjab Government through Punjab Information & Communication Technology Corporation Ltd. with 100% equity participation. At present, the State Government holds 71.28% (Punjab Information & Communication Technology Corporation Ltd. and 0.08% through PSIDC) of equity share capital in PUNCOM, amounting to Rs.8.57 crore. During 2017-18, the corporation suffered loss of Rs.3.81 crore, and accumulated loss (tentative) of the Corporation as on March 31, 2018 stood at around Rs.20.53 crore.

PFC was incorporated under the State Financial Corporations Act, 1951, and came into existence on February 1, 1953 with the main objective to grant loans for the establishment of new micro, small & medium industrial concerns, modernization, and expansion/diversification of existing activities in the state. Punjab government holds 72.57% of the share capital of the corporation. The corporation remained in profit till 1996-97. Due to high cost borrowings and stiff competition from Commercial Banks from 1998 onwards, the Corporation moved into the red. Accumulated losses of the corporation as on December 30, 2017 were Rs.275 crore. The present outstanding of Bonds (SLR and non-SLR) is around Rs.172.26 crore. PFC has defaulted a sum of Rs.137.60 crore towards to bondholders (Principal Rs.96.21 crore + Interest Rs.41.39 crore) as on May 31, 2018, and is entangled in litigation.

PSIDC was incorporated in 1966 to act as a catalyst for the development of large and medium scale industries in the state. Punjab government holds 100% of share capital of PSIDC. Share capital of PSIDC was Rs. 66.515 crore at the time of incorporation and current share capital is Rs.78.215 crore. PSIDC promoted 322 projects in Joint/assisted/public sector and made equity investment of Rs.453.37 crore into these projects. PSIDC was also declared as a State Level Financial Institution under the re-finance scheme of IDBI and extended term loans of about RS. 676.54 crore. At present, the liability of PSIDC towards bonds guaranteed by the State Government is Rs. 601.06 crore and interest due thereon as on date is Rs.143.03 crore, thus making the total liability to be Rs.744.09 crore.