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Oil PSUs may get cash compensation: Govt

Public sector oil companies - IOC, BPCL and HPCL - may get compensated in cash for selling oil products below the cost instead of oil bonds, Petroleum Secretary R. S. Pandey said. "Most likely it subsidy is going to be cash," Pandey told reporters in New Delhi after a meeting with Finance Minister Pranab Mukherjee. He said that no decision had been taken on the quantum of compensation to be given by the Finance Minister. "Discussions were held and we hope to hear from them soon," Pandey said. The Petroleum Ministry had sought Rs200bn of oil bonds for public sector oil firms as compensation for FY10, as crude oil prices have started inching higher, S. Sundareshan, the No. 2 official in the Petroleum Ministry, had said last month.

The Ministry of Finance and the Ministry of Petroleum & Natural Gas have a difference of opinion on the amount of compensation. The Petroleum Ministry had asked for a compensation of Rs200bn for the three quarters. Estimates are that losses for the OMCs will zoom up to Rs450bn by the end of this fiscal year if crude oil prices remain at the current region of US$80 per barrel. The leading state-run oil marketing companies are set to post losses in the third quarter as well if the compensation is not announced soon. The Finance Ministry is not interested in giving oil bonds due to the pressures on fiscal deficit. At the same time, a price hike looks unlikely as of now, as it would add to inflation.

Govt to step up disinvestment

The Government said it has decided that all profitable listed Central Public Sector Enterprises should meet the mandatory listing of 10% public ownership. In addition, all unlisted CPSEs having positive networth, no accumulated losses and having a net profit in the three preceding consecutive years should get listed on the stock exchanges. The disinvestment proceeds would be channelised into the National Investment Fund (NIF), the Government said in a statement. The corpus comprising deposits from April 2009 till March 2012 would be available in full for investment as capital expenditure in specific social sector schemes determined by Planning Commission and Department of Expenditure. The status quo ante of NIF will be restored from April 2012, it added. The President’s Address to the Joint Session of Parliament on 4th June and Finance Minister’s Budget Speech on 6th July had articulated the intention of the UPA Government to encourage people participation in the disinvestment programme. It had mentioned that CPSEs are the wealth of the nation, and part of this wealth should rest in the hands of the people while retaining at least 51% Government equity in our enterprises.

The decision, which was announced by Home Minister P Chidambaram after a meeting of the Cabinet Committee on Economic Affairs (CCEA), opens the doors for around 50 companies to get listed, prominent among them being BSNL, RITES and Ircon. Though, 18 PSUs are listed and do not comply with the mandatory 10% public float norm, about 10 such companies are profitable and will need to come out with a follow on issue. These include MMTC and NMDC, Neyveli Lignite, State Trading Corp. and National Fertilizers. The Government owns 98.38% in NMDC, 99.33% in MMTC and 91.02% in State Trading corp., according to filings to the Bombay Stock Exchange (BSE). Hindustan Copper is 99.59% government-owned, while Rashtriya Chemicals & Fertilizers (RCF) is owned 92.5% by the Government. The Government didn’t provide any timeframe or schedule of share sale. The Government's disinvestment plan may help it mobilise more resources and reduce its dependence on borrowings, economists said

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6 PSU banks join Rs 1 lakh cr club

Higher credit offtake combined with robust deposit growth saw six public sector banks cross the landmark Rs 100,000 crore figure in business turnover, which includes net deposits as well as advances, in 2006-07.

The six banks that have joined the major league are Syndicate Bank, Indian Overseas Bank, UCO Bank, Oriental Bank of Commerce, IDBI Bank and Allahabad Bank.

State Bank of India (SBI) tops the chart of large-sized banks, with a total business turnover of Rs 772,858 crore, followed by Canara Bank (Rs 240,887 crore), Punjab National Bank (236,456 crore), Bank of Baroda (Rs 2,08,537 crore), Bank of India (Rs 204,817 crore), Union Bank of India (Rs 147,566 crore) and Central Bank of India (Rs 134,572 crore).

This took the total number of public sector banks that have surpassed the Rs 100,000 crore mark at the end of March 2007 to 13 against seven banks in 2005-06. With the Indian economy growing at a rapid pace, both deposits and advances have increased significantly during 2006-07.

The aggregate business turnover of public sector banks rose almost 26 per cent during the year compared with last year, while the total business volume rose by 7,05,713 crore to Rs 34,34,322 crore as on March 31, 2007.

The aggregate deposits of public sector banks rose 23 per cent to Rs 19,94,200 crore against Rs 16,22,481 crore, while bank credit recorded a robust growth of 30 per cent to Rs 14,40,123 crore compared with Rs 1106128 crore last year.

With rising inflation, interest rates rose across the board during the fiscal. Interest rates on deposits of major public sector banks over one-year maturity increased from 6-7 per cent in March 2006 to 7.5-9 per cent (as per the RBI Weekly Statistical Supplement) in March 2007.

While the increase in lending rates had a moderating impact on credit growth, the jump in deposit rates created favourable conditions for deposit growth.

Vijaya Bank, United Bank of India, Bank of Maharashtra and State Bank of Travancore crossed the Rs 50,000 crore mark to join the league of mid-sized banks.

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