Sunday, Oct 12, 2003
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Kerala
By P. Venugopal
On August 13 this year, the Minister for Cooperation and Ports, M.V. Raghavan, had called on the Union Minister for Disinvestment, Arun Shourie, to suggest that a multi-State cooperative society be set up to bid for the FACT shares being off-loaded by the Centre. Mr. Shourie, reportedly, had told the delegation that he could not accept such a proposal at a time when the procedures that had been set in motion for the FACT disinvestment had reached an advanced stage. He had also reportedly said that the process of disinvestment that had already been initiated could not be stopped unless the State Government itself was directly interested in purchasing the shares being off-loaded by the Centre. He had asked the State Government to consider whether it could purchase the shares at a price 30 per cent above their reserve price. Mr. Shourie had also told the delegation that such a transaction would be on the condition that the State Government would take over all liabilities of the company. He had requested the State Government to get back to him within three weeks. But the Government had not applied its mind on this issue so far, probably because of its pre-occupation with the Ernakulam by-election and the associated political developments. ``Though the deadline set for the State Government to respond to this suggestion is already over, it is still not too late to take the offer made by the Centre. Any further delay in taking a decision, however, might seal the fate of FACT,'' says K. Chandran Pillai, MP, who is intimately associated with the efforts to keep this company in the public sector. At present, the Centre has 97.38 per cent stakes in the FACT, with the remaining 2.62 per cent of the stakes being shared by the four southern States, the public and certain institutions. The disinvestment plan involves the off-loading of 51 per cent of the total stakes by the Centre. The total paid-up capital of the FACT is Rs. 355 crores. In the meantime, the Save FACT Action Council has sent a representation to Mr. Shourie urging him to "take certain realities into account'' while fixing the price of the shares being offered for purchase by the State Government. The Action Council, in its representation, noted that most of the land with the company was, in fact, not owned by the company, but by the State Government. The price of the land, presumably, constituted a substantial portion of FACT's reserve price itself. This factor should be taken into consideration while computing a fair price for the shares being offered to the State Government. The Action Council also urged Mr. Shourie not to insist on the State Government taking over all the liabilities of the company, especially a sum of Rs. 378 crores taken as loan from the OECF for the company's Ammonia plant, some old Plan loan allocations coming to around Rs. 100 crores and the unpaid interest on this loan. ``It is not possible for anyone to take the company forward with this liability. You have, in previous similar cases of disinvestment of public sector units to private sector, handed over companies after removing such dead weight," the representation pointed out.
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