Govt moots new MoU norms to help public sector units

Move aimed at providing them operational flexibility

The government is expected to come out with fresh set of guidelines for central public sector enterprises (CPSEs) soon to enable them greater operational flexibility in achieving annual targets.

This is in the backdrop of problems faced by public sector units, mainly Maharatnas and Navratnas, in achieving the targets fixed under the Memorandum of Understandings (MoUs).

A Working Group on MoU guidelines for CPSEs, chaired by by P G Mankad, was set up by the Department of Public Enterprises (DPE), in May, to examine the current system of setting targets and suggest measures to improve the MoU system.

“The new norms for MoU system are likely to be in place soon as the group is about to finalise the recommendations and submit a report to the DPE,” Secretary in DPE O P Rawat told PTI.

Once these are finalised, the department will process the case for taking necessary approval of the Committee of Secretaries to revamp the system, he said. The MoUs are signed between the CPSEs and administrative ministries/departments and is facilitated by the Department of Public Enterprises (DPE).

Under the present MoU system, equal weightage (50 per cent each) is assigned to financial and non-financial parameters.

While the financial parameters focus on profit and productivity related criteria, the non-financial ones are divided into dynamic (project implementation and R&D investment), enterprise-specific (safety and pollution) and sector-specific parameters (macro-economic factors like change in demand and supply and interest rates variations).

Currently, the annual target system do not factor in issues and fluctuations like prices of petroleum products and the difficulties power and coal sectors are facing.

“CPSEs have made a case for more weightage to sector- specific parameters so that they could focus more on completing projects on time,” Rawat said. Coal India, which accounts for over 80 per cent of the domestic production is battling with regulatory hurdles including delays in green nod to its various projects.

The government auditor CAG in its recent report tabled in Parliament last week observed that delays ranging from “one to 12 years” in execution of 32 projects under different subsidiaries of CIL entailed “loss of production of 115.95 MT.