The government’s own Technical Review Report belies the glum picture of the Bharat Aluminium Company (BALCO) that was painted of the public sector giant after the government was slammed for hawking it for a song. In the light of the revelations that it could be worth 10 times the 551.5 crore it was sold for to the Mumbai-based Sterlite Industries, Dipankar Mukherjee of the Communist Party of India (Marxist) renewed the demand for the setting up of Joint Parliamentary Committee (JPC) to probe into all aspects of the BALCO deal.
The Vajpayee government had cited undervalued assets as the reason for the low rate quoted by the bidder. The government had also cited “declining profits” as another reason for the disinvestments. Besides, Union Disinvestment Minister Arun Shourie had suggested that 4,000 crore more was required to be injected for the modernisation of the BALCO plant. The Technical Review Report, on the other hand, suggested that about 500 crore more would make it “more economically viable” and “vibrant”.
Dipankar Mukherjee, who led the Opposition charge on the government in the Rajya Sabha on Tuesday, February 27, on BALCO’s controversial sale, released excerpts from the Technical Review Report, saying that it did not bear out the government’s claims. Behre Dolbear International Limited, whose authenticity was vouched for by Shourie during his reply in the Rajya Sabha on Tuesday, led the Technical Review Report.
“The review found no fatal flaw or negative factor that would prevent an investment by an outside party in the BALCO enterprise,” Behre Dolbear International Limited said in its covering letter to the Technical Review Report on BALCO Operations, speaking on the PSUs future outlook and potential.
In another revealing point, the Technical Review says, “Behre Dolbear considers that the future outlook for BALCO as a commercial company looks bright indeed.” This is part of the suggested priorities for the future BALCO expenditure. It is in sharp contrast to the government’s claims that “declining profits” over the past four years had virtually forced the issue of BALCO’s disinvestment.
Mukherjee also said that the BALCO captive power plant could, in itself, be evaluated as high as 1,100 crore. “Apparently, the figure of 551 crore is not a realistic figure,” the CPI (M) leader said. Capital-intensive plants should have a review of their capital assets to arrive at a “just evaluation”, he said. The discounted cash-flow method favoured by the government is not the proper method, Mukherjee said.
The issue has been raised about why BALCO and the National Aluminium Corporation (NALCO) cannot be merged to integrate the two units and make them, as it has been suggested, “economically viable and vibrant”. The Vajpayee government has taken the extreme position that since BALCO is heading downhill, it should be disinvested on prioity before it becomes more non-viable. In fact, the Technical Review Report felt that a revamp could be completed in about 500 crore, perhaps substantially pushing up the real market value of BALCO and thus fetching it more than its going price to Sterlite.