KOLKATA (miningweekly.com) - A policy blueprint drawn up by India's Department of Public Enterprises (DPE) has proposed that cash-rich public sector companies set up joint ventures (JVs) in capital scarce African nations, particularly in the natural resources, infrastructure and allied technology sectors.

The note prepared by DPE observed that several Indian public sector companies were carrying a lot of surplus free cash on their balance sheets, which if deployed in African countries facing a capital crunch, but rich in natural resource, would be a diplomatic and economic ‘win-win’ strategic goal, an official privy to the policy-making said.

The proposal envisages restricting such JVs to those between government-owned companies of the respective nations for sufficient support on a government-to-government basis.

The note has been forwarded to the External Affairs Ministry for input on the identification of suitable investment destinations in Africa, based on the latter ministry’s dialogue and feedback from the recently concluded India-Africa Summit, he said.

In fact, the DPE has suggested that the Indian Heavy Industries Ministry and External Affairs Ministry jointly collaborate on framing an entire ecosystem of investment collaborations between government-owned and operated companies in India and African countries.

It has been suggested that the External Affairs Ministry through diplomatic channels and economic advisers in Indian embassies in African countries, emulate the Indian post-independent economic model wherein natural resource and allied sectors were dominated by government owned and operated companies and core infrastructure and mineral resources reserved for public sector companies only.

DPE has suggested that the External Affairs Ministry take a lead in dialogue with its counterparts in African countries to adopt such an economic model, paving the way for JV investments between government owned companies of respective countries in exclusively reserved sectors.

A meeting of senior African diplomats and economic attaches based in New Delhi would be convened shortly by way of a first round of deliberations on the investment plans.

The Ministry was expected to draw up a list of African destinations within the next few months after seeking informal feedback through diplomatic channels, the official added.

While the African investment safari for Indian public sector companies was yet to be finalised, indications were that Malawi, Zambia, Nigeria and Liberia were expected to figure high on the list as the countries had already been engaged during the September visits by the Indian Minister of Heavy Industries.

Though not officially stated, the cash-rich Indian government companies that could lead the African investment sojourn were oil and gas exploration and production majors ONGC Limited and Oil India Limited, heavy equipment and power plant manufacturer BHEL Limited, power producers NTPC Limited, and Power Finance Corporation (PFC) and iron ore miner NMDC Limited.

For example, CIL has free cash reserves of an estimated $8-billion on it balance sheet while NTPC’s kitty was estimated at $2.21-billion.

The DPE had argued that, in the first phase, facilitation of JVs should be limited to government-owned companies of respective Indian and African countries in sectors restricted to the public sector.

Since cross-border flow of investments was expected to face several legal, infrastructure and political challenges, facilitations at the sovereign level would be more effective in the case of government company collaborations than private investments, the official added.