A Committee of Secretaries last week recommended that Parliament should first guarantee privatisation of nationalised companies before the government parts with Rs 822 crore to clean the tyre maker’s balance sheet for subsequent sale.

That assurance would have to be through amendments in the Nationalisation Acts to provide for majority disinvestment for joint venture or privatisation, it said. Or else, the funding in TCIL would go into a black hole if Parliament were to block its privatisation after the monies are pumped, it added.

The CoS based its recommendation on Attorney General Milon Banerjee’s opinion that the SC order on disinvestment of BPCL and HPCL forbid the government to reduce its holding below 51 per cent under the existing act. The apex court had held that the Nationalisation Acts specifically provided that the government hold, at all times, 51 per cent of the paid-up share capital.

The CoS has, therefore, recommended that the Cabinet first approve the changes in the Acts, and TCIL’s revival plan be brought before the Cabinet Committee on Economic Affairs only after the enabling provisions are incorporated.

The amendments, if through, would provide the Centre an opportunity to rope in private sector participation in coal through joint ventures of sick PSUs like Eastern Coalfields Ltd and Bharat Coking Coal Ltd whose revamp plans had suggested induction of a private partner.

TCIL, incorporated in 1984 through the nationalisation of two private firms National Rubber Manufacturers Ltd and Inchek Tyres Ltd, has been a BIFR case since 1992. In June, the CCEA sought CoS views on TCIL package with 74 per cent equity sale to a strategic partner after the Finance Ministry refused to part write off Rs 822 crores to clean the PSU’s balance sheet.

The ministry had questioned its revival plan stating that the Centre had no business to be in tyre manufacturing. On that, the CoS has suggested that the government could either sell 74 per cent or 100 per cent of its equity.