With the 7500 workers of Balco (Bharat Aluminium Co.) in Chhatisgarh going on indefinite strike and opposition from a number of political parties, yet another throwaway sale of a profit-making Public sector unit has been exposed- and yet passed in Lok Sabha.

The facts of the deal are now clearly in the open. The around 5000 crore Balco (whose captive power plant alone costs 1500 crores) with a cash deposit of about Rs. 460 crores and an annual profit of about 150 crores has been sold (51% shares) for a paltry Rs. 551 crores to Sterilite Industries Ltd., a company earlier blacklisted by the Govt. Alongside, an uproar in Orissa Assembly has revealed that just a day before the deal was clinched, the BJD led Govt. (a constituent of NDA) transferred the lease of Bauxite mines in Raigarh to Balco and thus obviously to Sterilite. With the task of ‘challenging’ the Chhatisgarh CM’s allegation of a Rs. 100 crore kickback to the PMO for the deal, being left to occasional denials by the Disinvestment Minister, Mr. Shourie, the scenario of a total fraud with the people is quite complete. 

In defending the deal, Attorney General Soli Sorabjee stated that Balco had been evaluated by “experts in the field”, namely Jardine Fleming and P.V. Rao, whose “expertise and judgement cannot be easily doubted.” In the Parliament, Disinvestment Minister Shourie referred to a report by a UK based consultant Behre Dolbear International Ltd., to say that Balco’s performance is on the downswing and “all these factors were responsible for the stalemate in which the obsolete plant has got itself.” Shameless defence of an underhand deal indeed! Unfortunately extracts of the Dolbear report were released to the press by an MP and the Govt. is yet to issue any denial or release the document it has itself referred to. The extract released says (TOI, March 2, 2001) about the 270 MW captive power plant, “Dolbear consider that the captive power plant is a modern power house, well run and maintained and provides a high level of assurance to Balco through the management contract with NTPC.” The report titled “Technical report of the operations at Balco” does not go into the question of valuation. However, it has “suggested priorities for future capital expenditure” and after giving suggestions has totalled the amount needed to about Rs. 500 crore. It is relevant that Balco has around Rs. 460 crore of accumulated profits alone, a fact not contested by the Central Govt. Yet Shourie claimed on the basis of the same report that Balco required an investment of Rs. 4000 crore.

It is now known that Denis Acheson of Dolbear presented this report to Balco on 23^rd May last year through Jardine Fleming, global advisers to the Disinvestment Ministry. The Report comments “The future outlook of Balco as a commercial company is bright indeed” and about investment made in the company to achieve increase in production and sales, the Report comments, “A review of the historical, semifabricated output shows a clear trend in the sales volume of cold rolled products from zero in 1982-83 to about 20,000 tonnes by 1993-94 to nearly 30,000 tonnes by 1999-2000. This increase has been achieved with a very limited and almost negligible investment in the ageing rolling mills at Kobra.” (The UK based consultants of course obviously were aware that they were assessing for the purpose of privatization.)

From the Report, which, it is worth reiterating, the Govt. has not countered it by the simple act of releasing the Report (certainly mandatory for ‘transparency’), come the facts. The valuator Rao is a retired civil engineer, and is licensed to assess land and buildings and has no previous experience in metallurgical engineering. Rao’s biodata lists his 22 accomplishments, 15 relating to property assessments and two to bicycle factories. How Rao was chosen is another revealing story. He was shortlisted along with three others (Jardine did not give its criteria for doing so) and Balco’s Director (Finance) apparently chose him for the lowest valuation fee quoted! The valuation was done by Rao (and his expert) spending four days at Kobra and two days at the Asansol unit. Experts say such valuation may have relevance for a closed unit but not for an ongoing concern which should be valued for market share, potential earning capacity etc. Balco has a 15% market share but Rao supposedly remarked that this or the surpluses “were not relevant” as he only valued the fixed assets.

The third fact that the Disinvestment Minister is not able to explain is that the Disinvestment Commission (now disbanded) itself had recommended that only 40% equity be sold, during the course of implementing its policy of selling off profit making assets. At the time of Vajpayee’s second stint as PM, this 40% was valued at Rs. 2000 crores! No one has yet explained why the Cabinet took a decision for 51% equity sale despite the recommendation of its own Commission.

Violation of Tribals’ Rights

In addition to other points, an important aspect is the violation of laws banning sale of tribal land to private parties. MNCs and pro-privatization ruling class parties want such bans to go.  Metal industries are mostly situated in tribal areas and unless a route is opened to bypass these laws, MNCs’ ability to loot rich mineral resources will be hampered indeed. In this specifc case, under the 1894 Land Acquisition Act of MP, the Govt. acquires 1650 acres of tribal land in 1965 and transfered the land to Balco, a PSU, in 1972 under the Chapter VII of the same Act. In 1977 the Supreme Court passed a judgement imposing restrictions on setting up of private industries on tribal land. Thus the state govt. can cancel the lease to Balco as well. Supreme Court can block the Balco sale. Indeed in order to pacify tribal reaction as well as agitating workers, the Chhatisgarh Assembly has passed a resolution against the deal. However, they are attaching too much importance to an earlier order of the Supreme Court which in deal after deal, has shown utter insensitivity to the needs of the country, especially its poor. On the plea of the Attorney General  that workers’ plea against the deal was unsubstantiated and unfounded, the Supreme Court has stayed all petitions in the lower courts challenging the sale.

Balco sale has shown the ruling class parties, particularly NDA allies in their true colours. Both TDP and Trianmool had expressed apprehension over the deal only to back the Govt. when the issue was put to vote. Less said about the ex-socialists of NDA the better. They have thrown away all shame and even pretensions!

The agreement for sale of 51% equity states that workers of Balco will not be retrenched for one year. That is the time by which the Govt. expects the din to die down.