Central public sector enterprises may get power to decide on overseas buyout of energy assets

All profitable central public sector enterprises, or CPSEs, will soon be empowered to decide on overseas acquisition of energy assets without seeking an approval from the government. The dispensation was so far available only to maharatna and navaratna companies. 

State-run firms will be able to go ahead with a buyout proposal after due diligence under a new policy on acquisition of raw materials abroad cleared by heavy industries minister Praful Patel. 

The policy will be placed before the Union cabinet in a fortnight, Department of Public Enterprises (DPE) secretary Bhaskar Chatterjee said. It will be applicable to buyout of global oil, gas, coal and mineral assets except uranium reserves. 

Companies would be allowed to decide on appointment of consultants, forming project specific special purposes vehicles, and their merger or demergers, a government official said. "CPSEs making profits for the last three years may entertain proposals received directly or through a merchant banker with five years of experience. The companies will have powers to take calls to proceed with a proposal solely or in collaboration with other public or private companies," he added. 

While private firms like Reliance Industries , Tata Power ,Reliance Power and Lanco Infratech have acquired properties abroad, government companies have not been able to make any headway. 

The move will benefit state-owned companies such as Oil India , Gas Authority of India Ltd and Coal India , which have been mandated to look out for oil, gas and coal assets overseas. At present, companies with maharatna status can invest up to Rs 5,000 crore or 15% of their net worth without reference to the government. Navaratna companies can take standalone decisions for up to Rs 1,000 crore or 15% of their net worth. 

The government proposes to raise the limits to Rs 5,000 crore or 25% of net worth for maharatnas and Rs 3,000 crore or 25% of net worth for navaratnas. "However, the revised delegated powers would only be applicable for acquisition of foreign raw material assets," the official said.