MORE ON PUBLIC SECTOR DISINVESTMENT

Minister for Disinformation ! !

Sitaram Yechury  

THE government has obviously been rattled by the massive response the  May 21 all-India industrial strike evoked. The support it received from all sections of people, leading to a bandh in many states, seems to have  provoked  the government to rush ahead with its disinvestment plans, lest the protests snowball into a more militant movement. On May 30, the minister for disinvestment announced that within the next three/four months, the government will complete the privatisation of National Fertilisers,  Engineers India, Shipping Corporation, Hindustan Copper, Balmer Lawrie, State Trading Corporation and Hindustan Organics. These are apart from the disinvestment of the HPCL and BPCL.

SHAMELESS SERVILITY

A day earlier, on May 29, the minister kicked off road shows in Mumbai for the offloading of the government's 25 per cent stake in the automobile giant, Maruti. The minister, addressing the Suzuki Motor's chairman and CEO, shamelessly revealed the government's servility to foreign capital by saying: "Our honour is in your hands. Everyone will be watching what you can do with the company." Clearly, in the name of offloading the shares, the government is strengthening the multinational's control over the company which already holds 54.2 per cent of the stake in the Maruti.

The minister was euphoric on June 12, when the Maruti shares were put up for sale and they were sold out in less than three hours. The minister sees in this sees a vindication of his policies of disinvestment. When a blue chip company is being sold for a song, only the naïve would express happiness that people are eager to lap up such a sale. This is, in fact, no sale. It is a clear loot. Only 25 per cent of the sale of 7.22 crore shares, representing 25 per cent of the government's equity, was allowed to be bought by individuals. The rest is to be sold to institutional buyers or corporate companies. Since the shares are open till June 19, the composition of the buyers would only be known later. Nevertheless, it must be noted that the profits that the private sector will now make should have legitimately gone to the public sector which, in turn, should have been used for the people's welfare. The loot of the public sector, therefore, is not merely a loot of people's assets but is also at the  expense of people's welfare. 

GOVT BETRAYING THE PEOPLE

A more significant announcement the minister has made concerns the privatisation of  National Aluminium Company (NALCO).  Readers will recall that after a huge public protest in which the people of the state of Orissa rose as one man to oppose the privatisation of NALCO, the government was forced to back off. This second largest aluminium company in the country is 87 per cent owned by the  government. The government had earlier planned a strategic sale of 29.15 per cent of the company's equity (i e, anybody who pays this amount will automatically take over the management of the company as well).  Along with this, the government decided to offload 10 per cent of its stake through domestic shares and an additional 20 per cent through shares floated abroad. The minister announced that while placing the strategic sale on hold, the government nevertheless is proceeding with the offloading of shares to the tune of 30 per cent. This, we are told, is likely to be completed in the next six months. 

Speaking to newspersons in Mumbai on May 30, the minister said: "We expect to complete the asset sale in NALCO by November 2003."  Clearly, the government is backing out of the commitment it gave to the country and specifically to the people of Orissa that it shall not go ahead with the privatisation of NALCO.

Not only is the government betraying the people on this count, but is proceeding to offload its shares in a great hurry. Why this hurry? The answer lies in the fact that the global aluminium prices are on the rise. This is so because of the huge Chinese demand in the international market. China, which currently consumes around 4.5 million tonnes of aluminium every year, is likely to see a rise in its demand to double digits in the coming years.   Its demand has already led to a sharp increase in the price of alumina ---  the intermediate product between the raw material bauxite and aluminium --- to around 300 dollars per tonne. Given this, companies are finding it increasingly economical to import the metal directly at about 1,400 dollars per tonne. For China, buying alumina at 300 dollars per tonne and converting it into aluminium would make it more costly. Hence its increasing demand to import the metal directly. All this is expected to boost the prices of aluminium even further. 

The hurry to privatise the NALCO is precisely because of the rising international prices of aluminium. Eager to create conditions for the private sector to reap super profits, this Vajpayee government is depriving the public sector and, therefore, the country of such potential gains. Of the 30 per cent shares being offloaded, anyone acquiring 24 per cent can have members on the board of directors, which decides on the company's policies.  Clearly, this is a government that works for the business sector. Its business is to create conditions for the business sector to make super profits. 

LIES AND DAMNED LIES

What are the assets of NALCO the minister is so keen to sell by November 2003? The NALCO was set up in 1981 with foreign loans totalling Rs 2,408 crore. It paid back the entire loan by 1998. It is currently mid-way of a massive project expansion involving Rs 4,200 crore, generated from its own resources. It has already spent Rs 3,200 crore to date. It has a rich bauxite reserve of 300 million tonnes --- sufficient to meet its requirement for 100 years. It is the lowest cost producer of alumina in the world. It has a captive power plant. It, in fact, sells its surplus power to Orissa government at 97 paise per unit. (Compare  this with nearly Rs 6 per unit that Enron was charging!) 

The minister, who was patently unhappy that this prize possession of the Indian people could not be put at the mercy of private loot, had thundered last year that the prevention of NALCO's privatisation will turn the  company into a loss-making one. That he was speaking damned lies is proved by the fact that the NALCO, this year, registered a net profit (after paying taxes) of Rs 522 crore. Last year, it registered Rs 401 crore. In other  words, the  year the minister predicted that it will start  making losses, the NALCO made Rs 121 crore more in profit! The net profit earned by the company so far is around  Rs 5,000 crore. Every year, it pays to the government a very high dividend. In 2001-2002, it paid Rs 257 crore as dividend to the government. In addition, the company pays around Rs 250 crore as taxes to the government annually.

Given the rising international aluminium prices, it is expected that the NALCO's profit for the year 2003-2004 (after the completion of the ongoing modernisation) will be a whopping Rs 1200 crore. These are the assets that the minister wants to hand over to the private sector.

In order to do so, the minister embarks on a campaign of patent untruths and disinformation about the health of the company. Truly, he must be known more as the `minister for disinformation' rather than minister for disinvestment. 

The people of Orissa have heroically succeeded in the first round in preventing the strategic sale of NALCO. They will now have to display utmost vigilance to thwart all attempts that will be made to effect the  contemplated privatisation through the back door. The May 21 strike was absolutely complete in NALCO. The leading members of the unions and the officers who met me on June 5 in Bhubaneswar displayed patriotic grit and  determination not to allow the public sector to be looted in this manner.  Like we said in these columns earlier, it is the people of India who own the public sector. Governments that come and go are only managers who manage such public assets. No manager can sell the property without the permission of the owner.  In this case, the owner --- the people of India ---  have not given any such permission. If the manager nevertheless insists on going ahead, then there is no option left but to sack the manager.