Divestment drive: Govt looks to privatise PSUs in fertiliser sector

The Centre may look at privatising public sector undertakings (PSUs) in the fertiliser sector. It could be the first non-strategic sector where the government may implement its new Public Sector Enterprises (PSE) Policy, 2021.

The central government is learnt to be considering Rashtriya Chemicals and Fertilizers, National Fertilisers, Fertilizers and Chemicals Travancore (FACT), Fertilizer Corporation of India, and other fertiliser PSUs for privatisation. The process of privatising fertiliser PSU Project & Development India (PDIL) is already underway, and the Centre has received a good response from interested parties.

The Committee of Group of Officers (CGO), chaired by the NITI Aayog chief executive officer, is learnt to have identified these PSUs for privatisation and a sectoral note has been prepared. The CGO is tasked with identifying PSUs in non-strategic sectors for closure or privatisation. The note is said to have been prepared in consultation with the administrative ministry.

Besides the NITI Aayog CEO, the CGO comprises secretaries of the Department of Investment and Public Asset Management (DIPAM), the Department of Public Enterprises (DPE), the Department of Economic Affairs, and the secretary of the concerned ministry.

According to the PSE policy, 2021, the government will look at leaving non-strategic sectors, such as fertiliser, steel and tourism, by privatising or closing PSUs.

According to the policy, after sectoral and PSU identification, the DPE will seek in-principle approval from the Cabinet Committee on Economic Affairs (CCEA). Once approved by the CCEA for divestment, DIPAM will initiate the privatisation process. In case of closure of a PSU in a non-strategic sector, the DPE will drive the process, along with the administrative ministry. The closure timeline of PSUs has been revised to about eight months from approval from the CCEA.

Based on the latest Public Enterprises Survey, eight PSUs under the Department of Fertilizers – FCI Aravali Gypsum & Minerals India, FACT, Hindustan Fertilizer Corporation, Madras Fertilizers, National Fertilizers, PDIL, Rashtriya Chemicals and Fertilizers, Fertilizer Corporation of India — collectively reported a net profit of Rs 1,071 crore in FY21. The ninth PSU under the Department of Fertilizers, Brahmaputra Valley Fertilizer Corporation, reported a loss of Rs 138 crore in FY21.

In FY20, six fertiliser PSUs had reported a profit of Rs 1,293 crore, against eight PSUs reporting a profit of Rs 880 crore in FY19. 

Divestment Drive

1. Rashtriya Chemicals and Fertilizers, National Fertilisers, Fertilizers and Chemicals Travancore, and Fertilizer Corporation of India may be considered for privatisation 
2. The Committee of Group of Officers, chaired by NITIAayog CEO, is learnt to have prepared a sectoral note 
3. After sectoral and PSU identification, the Department of Public Enterprises will seek in-principle approval from CCEA 
4. Centre intends to exit non-strategic sector