Business turns reform heat on Sinha
IOC grapples with dilemmas of deregulation
More debt recovery panels on cards
WBSEB to set up three strategic business units

New Delhi, Nov 26: 
They were calling the gathering at the India Economic Summit the aggro-industry meet — aggro for aggressive, not agriculture — as businessman after industrialist, banker after shipper, pilloried the government in language that dispensed with the niceties of diplomatese.

“The time for politeness has gone,” said Rahul Bajaj, co-chairman of the summit, after the Prime Minister left the venue at the Teen Murti lawns. With that remark, he set the tone for finance minister Yashwant Sinha’s plenary session on ‘India’s Economic Priorities’. Sinha, not one to be found wanting for words, retorted: “I do not expect politeness when Bajaj is around.”

But that will probably be the first and last time in this, the 16th economic summit, that a government functionary will have gotten far with a repartee. Last week, Colette Mathur, director of the World Economic Forum, warned that industry will not mince words in expressing its dissatisfaction with the pace of reforms.

Since the first of the economic summits, corporate-speak has undergone change. From being deferential, yet enthusiastic in Rajiv Gandhi’s time, to being upbeat and happy with Manmohan Singh since 1991, industry has now shifted gears. It now insists — nay demands — that the government listen to it and better do as it says, or else capital will fly away. But the change also signifies a greater bonhomie between industry and the government. So much better, that formalities can be dispensed with. A Sinha who does not expect politeness from a Bajaj is also a Sinha who is confident he can count on his support.

There were others, too, in the audience who watched in glee, the discomfiture of the finance minister: Anil Ambani, Ajit Gulabchand and Ajit Piramal, CII president Arun Bharat Ram and director general Tarun Das — the men who were behind today’s function — and the foursome whom somebody called the Calcutta Mafia: Sanjeev Goenka, Harsh Neotiya, Yogi Deveshwar and Rajive Kaul.

Sinha was eager to please. All he pleaded for from what is probably the largest gathering of India’s rich and powerful, was a little bit of patience. For the record, Sinha did say that the main objective of the government’s reform programme was reduction of poverty. He even talked of reverse discrimination — discrimination in favour of the marginalised, but the audience was in no mood for such ideas. Earier, even before the minister took the dais, foreign investors gave the Prime Minister a piece of their collective mind. Just after Vajpayee finished his speech, CII vice-president Sanjeev Goenka said four ‘overseas friends’ wanted to comment on India’s economic policies.

Georges Ugeux, group vice-president of the New York Stock Exchange, told the Prime Minister he will have to privilege of ringing the opening bell at the NYSE if he ensured speedy reforms. Sunil Wadhwani, CEO and co-founder of iGATE Capital, told the PM India wasn’t doing enough to expand its base of software professionals. “We need to increase their number by a factor of 10,” he said.

Percy Barnevik, co-chairman of the summit and chairman of Investor AB of Sweden, asked Sinha what he was doing against vested interests in the government that were slowing reforms.

Vajpayee’s speech itself attracted critical comments during the break between the inaugural and the plenary sessions. “He is offloading the government’s baggage on the industry,” said a construction magnate on the Prime Minister’s appeal to the Confederation of Indian Industry (CII) to take charge of 4,000 primary schools and health centres.

There will be more in the line of the fire as the summit stretches over two more days. Disinvestment secretary Pradip Baijal, IRDA chairman N Rangachary, commerce and industries secretary P G Mankad, ministers Vasundhara Raje, Omar Abdullah, are some other government functionaries likely to take the flak.    

New Delhi, Nov 26: 
Indian Oil Corporation (IOC), once rated as the jewel in India’s corporate crown, faces an uncertain future.

With the top management remaining divided over many sensitive issues and the boss, M. A. Pathan, failing to hold them together, IOC may not be in a position to redefine its role in a deregulated market. There are two warring factions in the top brass, acknowledged a director.

The ministry of petroleum and natural gas, instead of provding direction to the premier PSU, is doing everything possible to rein it in. Minister Ram Naik’s decision that the government retain 51 per cent equity in IOC is seen by industry circles as beginning of the process of undermining it. Naik is seeking to accomplish what Arthur D Little failed to achieve through its recommendations to split up IOC, say sources.

Gas Authority of India Ltd (GAIL) enjoys a monopoly over the gas market and by virtue of its control over the pipeline network it will not be possible for any rival, both Indian and foreign,to pose any serious challenge to its position.

Similar is the case with Oil and Natural Gas Corporation (ONGC) whose upstream leaderhip will remain unchallenged as not many private companies will like to enter this high risk area. Multinationals have been shying away from exploration activity as India is not perceived to be prolific in hydrocarbon deposits.

In comparison, IOC faces challenges from many quarters. The domestic giant, Reliance Petroleum Ltd (RPL), may be on par with it in refining capacity in the next two or three years. RPL came up with a 27 million ton refinery without the requisite licence, but the government delicensed the refining sector as the project reached the penultimate stage. RPL may enter marketing as well. Oil major Shell and Kuwait’s national oil company, KPC, are preparing to enter the domestic retail market. Essar and MRPL will also emerge as rivals at a later stage.

The superannuated senior and middle-level executives of IOC and other downstream PSUs invariably land up in these private ventures. in fact, by the time they enter the board, they begin hobnobbing with rival companies to secure a job after superannuation.

There are allegations in IOC that major policy decisions are leaked out to rivals as soon as the board meeting is over. Sources say this is inevitable in a system where the take-home pay of a director and that of a driver is more or less the same.

While its rivals will be guided strictly by commercial interests, IOC’s decisions will continue to be influenced by politicians and burueaucrats. IOC’s recent decision to sign an MoU with Enron for marketing imported gas on the West Coast saw former petroleum secretary, S. Narayan cry foul.

A couple of years ago, IOC decided to double the licensed capacity of Paradeep refinery project from six million to per annum to 12 million tonnes per annum. This was questioned by then joint secretary, Nirmal Singh, who pruned it to 9 million tonnes. Later,the public investment board ruled that the project would not be viable on account of its low capacity.

There are and there will be innumerable such instances of bureaucrats and politicians fooling around with the fortunes of IOC.

Rival companies cannot foray into the Indian market unless IOC is weakened. However, the process seems to have begun, say oil industry circles. If the government is keen to retain it as the downstream flagship company, then it calls for a different strategy altogether, they reckon.    

Calcutta, Nov 26: 
The government is planning to set up eight another debt recovery tribunals (DRTs) in the country.

“Bankers had been asking the finance ministry to set up more DRTs in the country so that the suit file cases can be handled more smoothly. The government has now accepted our proposal,” a senior banker said.

Of the proposed eight tribunals, one will come up in Calcutta while three others will be set up in Mumbai. There are already 14 DRTs in the country. “However, they are overburdened with cases. Some of them even handle more than 1000 accounts,” bankers said. Bankers have also asked the finance ministry to reduce the number of accounts handled by each DRT, from the current 1,000 to a reasonable level of 800 accounts per DRT.

They have also requested finance minister Yashwant Sinha to allow filing of cases against debtors who have been referred to the Board for Industrial and Financial Reconstruction. Sinha has said that the government is already working to amend the Sick Industrial Companies Act (Sica) and giving a new shape to BIFR.

Public sector banks had reduced their non-performing assets to Rs 3,050 crore as on September 31, from a figure of Rs 53,600 crore. While recovery of small loans, in the range of Rs 1 crore to Rs 10 crore, have been greater, recovery of big loans, however, continues to be a problem despite the “fairly liberal” settlement scheme announced by the RBI.    

Calcutta, Nov 26: 
The West Bengal State Electricity Board (WBSEB) plans to separate its generation, transmission and distribution divisions into three strategic business units to fix accountability on each of them.

Sources said the move, which was being contemplated in line with the N.C. Basu committee recommendations, also attempted at reducing the whopping transmission and distribution losses that have been estimated at well over 30 per cent. Besides, a study is being currently carried out by the US based consulting firm, Haigler Bailly. The study, funded entirely by the Power Finance Corporation (PFC) is expected to be submitted in the next couple of months.

“We are very serious about implementing the concept which will not only reduce the T&D losses but also raise the operational efficiency to the necessary level,” said a top WBSEB official.

Under the concept, the generation division will sell power to the transmission unit, which in turn will sell it to the distribution division. The revenue will flow in reverse fashion, from the distribution section, which will collect bills from the 38 lakh consumers and meet bills raised by the transmission. “All three SBUs will have complete autonomy,” the official said.

Since the distribution sector collects the revenue from the users, the board is planning to classify it into five more profit centres based on the five existing zonal offices. These zones are Siliguri, Behrampur, Burdwan, Midnapur and Calcutta. Currently all five zones are losing heavily due to the heavy thefts and pilferage of power, particularly in rural areas.

Creating a separate distribution wing is expected to instil a greater sense of accountability leading to healthy competition. The move, however, is seen as a precursor to the broadbase power sector reforms that the state government plans to implement.

Moreover, the ailing state power utility needs to rev up its operational efficiency to meet the State Electricity Regulatory Commission’s criteria for approving the board’s demand for a hike in charges. The restructuring, when in place, is expected to give major boost to the board’s bottomline.    


Maintained by Web Development Company