Strategic Disinvestment Current Affairs

Government clears 100% strategic sale of CEL

The Union Government (Department of Investment and Public Asset Management) has approved a 100% disinvestment through strategic sale along with transfer of management control of Central Electronics Ltd. (CEL).

CEL was incorporated as CPSE in 1974 under the administrative control of Ministry of Science and Technology. It is wholly owned by the government and has a net worth of Rs. 50.34 crore as on March 2017.

The government is planning to engage an advisor from a consulting firm, investment banker or financial institution or merchant banker for providing advisory services and managing the disinvestment process.

Alternative mechanism

The strategic disinvestment of CEL will take place through new alternative mechanism which was approved by the cabinet committee on economic affairs (CCEA) in August 2017. The alternative mechanism was approved for pursuing the government’s strategic sale disinvestment programme. This mechanism comprise of finance minister, minister for road transport & highways and the minister for the concerned administrative ministry.

Strategic disinvestment

In Strategic disinvestment, significant proportion of a Public Sector Unit’s (PSU) share and the management control goes to a private sector which is as strategic partner. It is different from the ordinary disinvestment in which management of PSU is retained with Government.

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CCEA approves procedure and mechanism for Strategic Disinvestment

The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister Narendra Modi has approved revision in the procedure and mechanism for strategic disinvestment.

In this regard, the proposal was forwarded by the Department of Investment and public Asset Management (DIPAM). The approval will help in speedy completion of strategic disinvestment transactions.

Revised mechanism for strategic disinvestment

Setting up an Alternative Mechanism (AM): It will decide on the matters relating to terms and conditions of the sale from the stage of inviting of Express of Interests (Eols) till inviting of financial bid. It will consist of the Finance Minister, Minister for Road Transport & Highways and Minister of Administrative Department.

Empowering the Core Group of Secretaries (CGD): It will enable CGD to take policy decisions with regard to procedural issues and consider deviations as necessary from time to time for effective implementation of decisions of CCEA. 

Strategic Disinvestment

In Strategic disinvestment, significant proportion of a Public Sector Unit’s (PSU) share and the management control goes to a private sector which is considered as strategic partner. It is different from the ordinary disinvestment in which management of PSU is retained with Government.

Department of Investment and public Asset Management (DIPAM)

DIPAM is the nodal agency of Union Finance Ministry mandated to advise the Union Government in the matters of financial restructuring of PSUs and also for attracting investment through capital markets. It will also deal with all matters relating to sale of Union Government’s equity in PSUs through private placement or offer for sale or any other mode in the erstwhile Central PSUs.

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