NALCO Privatisation Move Faces Stiff Resistance

 Sivaji Patnaik

AS soon as the Vajpayee government’s cabinet committee on disinvestment announced its decision to privatise the National Aluminum Company Ltd. (NALCO) by disinvesting 61.15 per cent of its shares, a wave of shock gripped the democratic people of Orissa. Workers and employees in the state were particularly incensed, as they are facing very bad days because of the declared and undeclared closures, ‘voluntary’ retirement scheme (VRS), abolition of some departments and privatisation of the state government’s undertakings.

It will be noted that the government at present controls only 87.15 per cent of the NALCO shares after the first dose of about 13 per cent disinvestment.

MASSIVE PROTEST

In fact, the workers and employees did not expect this highly profit making concern to be handed over to some private party in this way. NALCO is in the core sector and produces high quality aluminum, a strategic metal in view of its increasing use in defence, aircraft, space appliances, etc, as well as in surface transport and railways, electric and construction sectors. All these are major areas of the government’s activities.

The initial shock was followed by a wave of protests by trade unions, mass organisations and all the political parties except the BJP. Naturally, NALCO workers came out in massive demonstrations and rallies at both the main places of production --- Angul and Damanjodi in Koraput. Their actions were coordinated by trade unions, with the CITU taking the initiative to give a shape to this movement against privatisation. All the non-BJP political parties, including the ruling BJD, joined the convention organised by the coordinating body of trade unions on September 15 and supported the Orissa bandh of September 19 which was a grand success. 

These protests, conducted jointly by trade unions or independently by Left parties and the Congress, have attracted the masses, and this has developed as a major issue among the people. Militant demonstrations by NALCO workers at Angul and Damanjodi, which prevented the private bidders to enter these towns, have galvanised the situation. A series of massive joint demonstrations by the CPI and CPI(M), and particularly the obstruction of goods trains throughout the state by CPI(M) volunteers on November 11, have added force to the protest.

Such massive opposition from various quarters has indeed delayed the privatisation bid. Yet the government is bent upon disinvesting its shares within the next three months.

NALCO’S PROFITABILITY

The NALCO was established in 1981 by the government of India with technological assistance of M/s Aluminium Pechiney of France, at a project cost of Rs 2,408 crore. Of this amount, Rs 1,289 crore was the government of India’s share and Rs 1,119 crore came as a Euro-dollar loan extended by a consortium of international banks.

But this public sector undertaking (PSU), which started production in 1987, paid back the foreign loan within 5 years, making the concern completely debt-free. At the same time, 50 per cent of the government of India’s investment was also paid back. Moreover, out of its net profits, reserves and surplus, the NALCO has reinvested Rs 29,000 crore on expansion.

Over the years, the concern has earned an average net profit of Rs 550 crore per annum after paying taxes. If we look at the financial performance of this ‘mini ratna’ in the year 2000-2001, its sales turnover was Rs 2,409 crore including export to the tune of Rs 1,314 crore, and it made a stunning profit of Rs 664 crore despite stiff competition. It has earned foreign exchange to the tune of Rs 8,820 crore and is successfully competing in the international market.

Over the last five years, the NALCO has made a cumulative profit of Rs 2454 crore and paid 40 per cent dividend to the government. This PSU has paid Rs 1,011 crore to the government of India as dividend and Rs 1,100 crore as royalty, taxes and fees, etc. Further, it is financing its Rs 3,900 crore expansion towards doubling of capacity, out of its own reserves. As a result, the production of bauxite, alumina, power and aluminium has increased.

IN THE SERVICE OF MONOPOLISTS

It is such a PSU that is proposed to be privatised with the disinvestment of 61.15 per cent of its shares. Of this, as per the cabinet committee’s decision, 10 per cent of the shares will be sold in the domestic market, 20 per cent through the American Depository Receipts (ADR), and 2 per cent to the employees. The rest 29.15 per cent shares will be offered to a strategic partner who will be the real owner, with control over management. Through this disinvestment the government of India will get only Rs 2,900 crore whereas the NALCO has a reserve fund of Rs 25,000 crore and its assets are valued at more than Rs 15,000 crore.

The high quality of bauxite from the NALCO’s mines and the lowest cost of production in the world have allured as many as 15 bidders from inside and outside the country. Indian bidders are having foreign collaborators also. It now appears that the Aditya Birla group, with a foreign collaborator, will get the concern; this was what has been reportedly agreed upon since the days of BALCO privatisation. As a result, the group will have complete monopoly over the internal market of aluminium, of which it at present controls 51 per cent. Thus, the addition of NALCO’s 24 per cent market share will enable them to control the whole market. But this will happen only at the cost of the nation’s as well as Orissa’s interest, as it will affect 17,000 permanent and temporary workers and more than 50,000 families who earn this livelihood through NALCO.

The working people of Orissa are agitated over this move of the central government. Trade unions and Left parties are in the forefront of the movement against NALCO privatisation. This issue has come up in a very prominent way in the various district level joint conventions of the trade unions and industrial federations, along with other problems faced by the working class. NALCO privatisation will be the main issue at a state level workers’ rally, which is being organised by the trade unions at Bhubaneswar on November 23. A convention is going to be held at Delhi on November 27 against the privatisation of NALCO, and will be followed by a dharna before parliament on November 28. After this, the trade unions will chalk out a future programme of action, in consultation with various political parties and mass organisations.