New Delhi, Sept. 28: Telecom and power sector firms reacted with alarm at the government?s directive to declare a minimum dividend of 20 per cent on their net profits.

A senior executive of National Thermal Power Corporation said: ?This is certainly not good news just when we are coming out with an initial public offer. The government has a right to take austerity measures but directing the profit-making PSUs to shell out higher dividend will kill the goose that has been laying golden eggs.?

NTPC is due to come out with an over Rs 5,000-crore public issue later this month ? the second largest public issue since the TCS offering. The company had recently paid a dividend of Rs 1,000 crore to the government.

R. Krishnamoorthy, the chairman and managing director of Power Finance Corporation (PFC), said: ?We were already paying 20 per cent dividend and do not expect any major impact. But other power PSUs will certainly feel the heat.?

Yogendra Prasad, the chairman and managing director of National Hydroelectric Power Corporation, said: ?It will impact our future investments in projects, but it is the government?s money and they have the right to decide how the money is to be used.?

The chairman and managing director of Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam Ltd, the two profit-making telecom public sector companies, refused to make a comment.

However, a director of the BSNL board said: ?There is inherent defect in the design of PSUs. The government?s strategy is not to increase profits but to milk PSUs to raise funds for other schemes. This is not good for PSUs.?

The executives were also unhappy with the government?s decision to ban purchase of vehicles for official purposes and the restriction on use of staff cars and official vehicles. Power public sector companies spend more than Rs 10 crore a month on fuel and maintenance of vehicles.

The government has also directed the state-owned companies to make timely payment of loans provided by the government, besides exercising utmost economy in use of staff cars and other official vehicles. Funds for expenditure on petrol, oil, lubricants and travel will be reduced by 10 per cent.

All ministries and departments have been asked to observe utmost austerity while organising conferences and seminars.

The government also indicated that no funds will be released to autonomous bodies that have substantial unutilised balances at their disposal.