| Singh and Mahajan: Squaring off for a showdown
New Delhi, Dec. 11: The finance ministry has circulated a policy note on infrastructure restructuring in which it has strongly advocated selling off state-run telecom service provider Bharat Sanchar Nigam Limited.
The note also suggested a hands-off approach towards a reformed Telecom Regulatory Authority of India (Trai).
Interestingly, the note comes on the back of the government referring over a dozen companies, including BSNL and Mahanagar Telecom Nigam Ltd, to the Disinvestment Commission. Communications minister Pramod Mahajan is known to be against the sale of BSNL and, at one stage, even advocated its merger with MTNL in a bid to stall any such move.
The bid to sell off these “crown jewels” is certain to set him on a fresh collision course with both finance minister Jaswant Singh and disinvestment minister Arun Shourie.
The two have already battled it out on the way the Tatas tried to take out cash reserves from VSNL to invest in a group company, a move which invited Mahajan’s ire.
The communications minister, who is now believed to be trying to work his way into what is referred to as the ‘Advani camp’ within the BJP, also lent his voice to a group within the Cabinet protesting against the “manner in which disinvestment was being conducted”.
The finance ministry note, which addresses the problem of de-bottlenecking infrastructure, shows that despite these protests the reformist lobby within the Cabinet is determined to go ahead with major disinvestment decisions.
Ministry officials, however, say the note prepared for Singh by the department of economic affairs, has not advocated the manner in which the selloff is to be accomplished. It has refrained from commenting on whether BSNL should be sold to a single strategic buyer or should be sold in the form of public offerings transforming it into a board-managed company.
Communications ministry officials are not in favour of handing over either BSNL or MTNL to any single entity as they feel it would transform state-run monoliths into privately-run monopolies which could have disastrous effects on the market. The ministry, on its part, had in the past even mooted a plan to trifurcate BSNL to guard against such an eventuality so that no single company gains control over this huge entity.
A trifurcated entity would, of course, be an easier option to sell off, though the process of breaking up the company would mean more time gained by the communications ministry within which to work out a strategy to stall the sale.
BSNL is a huge monolith that offers basic, cellular and long-distance telephony services to virtually all parts of the country except the two metros—Delhi and Mumbai. It ran up losses of about Rs 4,052 crore for the year ended March 2002.
Sources said reforms being envisaged in running Trai will basically be limited to personnel reforms.
Like Sebi and RBI, Trai will have a corps of officers recruited by it, instead of being run by government officers on deputation. This, it is hoped, will result in a “human and institutional transformation of Trai”.