Specifically, the government will work towards selling its holdings in Madras Refineries, Cochin Refineries and IBP to Indian Oil Corporation and Bharat Petroleum Corporation as part of an overall recast plan in the oil industry. At current market prices, this will fetch the government close to Rs 2,000 crore.

This is not all. The think-tank in New Delhi is believed to have indicated that the centre's stakes in Engineers India and Oil India could also be sold to one ofthe big three -- HPCL, IOC or BPCL. Current indications are that around ten per cent of government holding in Oil India would be offered to BPCL while a larger chunk in EIL would be divested to IOC. This, again, would translate into a substantial inflow to the centre's coffers.

"The announcement of a huge sum like Rs 10,000 crore as the divestment target for 1999-2000 was deliberate," sources say indicating that a major chunk of this amount would come from the oil companies. It is also clear that there will be no further attempt at creating crossholdings between IOC and ONGC as was done in 1998-99 to raise money. The move came in for a lot of criticism as the share prices of these companies have crashed to abysmal lows though strictly speaking this had more to do with investor sentiment than the crossholding deal.

The government is as keen on promoting the northeast region as a key area of focus for the oil sector and there have been unconfirmed reports that one of the two -- either BPCL or HPCL -- couldhave its second headquarters in Assam. This, in turn, would mean that either would be asked to buy out a part of the centre's stake in Oil India where even 26 per cent could work out to a staggering Rs 600 crore.

It may also be recalled that the centre is close to finalising sale of its 60 per cent holding in Lubrizol India to IOC and Lubrizol Corporation of the US. According to sources, this is expected to be done during the next two months which means the company would then become a 50:50 venture between IOC and Lubrizol (it is presently 60:40 of the government and Lubrizol).

Another source of revenue to the centre would be from the sale of its 26 per cent stake in IPCL to a strategic partner. The process of selecting an advisor for the process has already begun and it remains to be seen if the sale will be completed during the next fiscal.

Observers reiterate that the process of reforms in the PSUs has kicked off in right earnest and this has become especially crucial for the oil companies what withderegulation due to happen barely three years from now.

The ultimate objective is to protect their interests which would mean ensuring a safe umbrella for MRL, CRL, IBP through direct sale of government stake to BPCL/IOC. Next would be divesting its holding in EIL and Oil India in phases to HPCL/BPCL/IOC so that eventually the entire oil sector will be a formidable entity that will stand up to competition in an era of market-determined pricing.