Vedanta Asks Government To Sell Majority Stake In PSUs To Cut Import Bill
Vedanta asks the government to sell its majority stake in PSUs to cut import bill by 25%.
Vedanta Ltd. has made a strong case for the government selling its majority stake in public sector companies such as Oil and Natural Gas Corporation Ltd. and Coal India Ltd. for transferring their assets to private firms to cut import bill by at least 25 percent.
The suggestion in the form of a full-page advertisement in national dailies came at a time oil regulator Directorate General of Hydrocarbons has proposed to the petroleum ministry to sell 60 percent stake in 15 oil and gas producing fields of ONGC and Oil India Ltd. to private firms.
Mining mogul Anil Agarwal-led Vedanta, which had acquired 51 percent government stake in Bharat Aluminium Company Ltd. for Rs 551 crore in 2011 and 64 percent in Hindustan Zinc Ltd. for over Rs 750 crore in 2002-03, said that privatising mineral and hydrocarbon producing PSUs or their assets would lead to 10 times more production.
In the advertisement, the firm said: “India is a rich country yet poor.”
The ‘fastest’ way to raise contribution of metals, minerals and oil and gas in India’s gross domestic product from 2 percent to 7 percent is “to bring private partners in all government companies such as Kolar, Coal India, Hindustan Copper, ONGC, NMDC and others, with majority stake in the company or at the asset level.”
Vedanta, which principally was a mining company, ventured into the oil and gas space in 2011 when it acquired Cairn India from its British promoters. While its mining acquisitions have been hugely successful as it turned around both Balco and HZL, its oil and gas business has not met with similar success.
Cairn India in 2012 produced 1,75,000 barrels per day of oil from Mangala and Bhagyam fields—the two biggest fields in the prolific Rajasthan block—and targeted 2,40,000 barrels per day with the addition of Aishwariya field in 2013.
Five years with Vedanta at the helm, the entire Rajasthan block accounted for 1,10,137 barrels per day of production at the end of 2016-17, according to a company statement of April 11.
As proved in the past, this (involving private sector) will lead to 10 times more jobs and 10 times more production with at least 25 percent reduction in import bill. This can be achieved within two years without allowing any job losses.Vedanta Advertisement
To encourage employees, stock options of up to 5 percent of equity capital can be offered to them, it said.
Vedanta also said the Mines and Minerals (Development and Regulation) Act needs to be amended to make it more attractive.
“This requires immediate attention. It needs to be production oriented and targeted towards 30-40 percent revenue sharing,” it said.
It wants bauxite mines to be auctioned without delay as India has one of the highest mineral reserves. Also, the cap on iron ore production is expected to help realise Prime Minister’s vision of producing 300 million tonnes of steel in India.
India’s geology is better or similar to Australia, South Africa and the Middle-East. With its tremendous human resource, India can produce these minerals using world-class technology with priority to safeguard our environment.