|Nikunj Ohri / New Delhi February 22, 2021|
A top-level inter-ministerial group has expressed concern over the delay in the land license policy of the Railway Ministry. Due to delay in this policy, the process of privatization of Container Corporation of India is being hampered. The committee headed by Secretary, Department of Investment and Public Asset Management (Deepam) is looking into the process of privatization of CONCOR. The privatization of CONCOR was announced in November 2019.
The new policy is expected to provide clarity in lease rates that new purchasers of CONCOR will have to pay. A source said that the Ministry of Railways has issued a cabinet note for the policy.
In response to a Business Standard question, the Ministry of Railways said, “There is no delay in framing the land licensing policy and it is categorically denied.” The ministry said that according to the budget speech, the divestment of CONCOR is planned next year.
Various departments including expenditure, economic affairs, corporate affairs, law are also represented in the inter-ministerial group co-chaired by the Railway Board member.
In November 2019, the Cabinet Committee on Economic Affairs gave in-principle approval for privatization of CONCOR including Bharat Petroleum Corporation Limited (BPCL) and Shipping Corporation of India (SCI). While BPCL and SCI are in various stages of disinvestment, the process of privatization of CONCOR has not started yet.
Finance Minister Nirmala Sitharaman said in her budget speech, ‘Despite Kovid-19, we are working for strategic disinvestment. Several deals, including BPCL, Air India, SCI, CONCOR, IDBI Bank, BEML, Pawan Hans, Nilanchal Ispat Nigam Limited, will be completed in 2021-22.
The Ministry of Railways said, ‘The Ministry is proud to bring in new management solutions to complete its projects on time and expedite existing projects and possibly complete projects ahead of the standard deadline. One of the main pillars of the new and efficient management mantra is the prompt readiness in the initial stages rather than getting entangled in legal complexities or stuck in the final stages of the project. A major reason for many projects not being completed prior to 2014 is the lack of comprehensive equitable enterprise.
The IMG has also told the railways that there should be sufficient clarity regarding the lease for potential investors or buyers of CONCOR. It is learned that the IMG has said that if the government does not provide clarity on the business of the company for at least ten years, it will not get any buyer. Another government official aware of this discussion said that since the proposed strategic disinvestment PSUs are not sold to PSUs, the entire process should be transparent with clarity on the financial position of the business.
In April 2020, the Ministry of Railways introduced a land licensing fee system for the industrial use of its land. The first PSU containers were manufactured on land leased from the railways based on license fee per container. Under this policy, PSUs paid a license fee of 6% of the market value of the land, which increased the cost of the company and disrupted the government’s plan to privatize CONCOR. The Railway Ministry told the IMG that it was engaged in relief work related to Kovid-19 like the operation of labor trains etc. which led to the delay in policy formulation. Lack of labor force has also been made an issue during the epidemic.