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Wednesday, 28 September 2011 00:00
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When he clinched the joint venture with the government-owned Mazagon Dock Limited a few weeks ago, Pipavav Shipyard’s chairman Nikhil Gandhi had every reason to be thrilled. Since Mazagon is the only shipyard with the capability of supplying heavy warships, any joint venture with it will be in the best position to get orders from the navy. Not surprising, then, that the moment the JV was announced, firms like L&T, who lost out, were quick to cry foul. We were considered, they said, but before we could give the necessary details, the decision got taken. While both Mazagon and Pipavav deny favouritism, defence minister Antony decided to put the JV on hold, saying it needed to be examined further.

While the defence ministry will take its own sweet time, more than anything else, the episode highlights the disadvantages that government organisations face. If they function in the old way, they are accused of being slow and lethargic, even uncompetitive. If they decide to get a bit more nimble and, perhaps, form a JV, all manner of allegations are made. None of this is to take a view on the allegations, but can you imagine anyone telling Bharti Airtel whom to sign a JV with or whose equipment to buy? Yet, this happens regularly with PSU telcos like BSNL—indeed, the PSU’s expansion plans have been badly hit on several occasions with various vendors going to court to cancel tenders. In the final analysis, if the government wants to steer clear of controversies, its best bet lies in getting out of PSUs. If protecting jobs of employees is an issue, as it surely is, there are enough safeguards that can be built in while privatising units. Airports at Delhi and Mumbai have been privatised, for instance, with such clauses—many workers chose to stay with the government despite the higher salaries being offered by the private-sector concessionaires, but the fact that such a choice was given, made the privatisation a lot less painful.

 

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