In a sell-off schedule that the DoD presented to the cabinet committee on disinvestment (CCD) at the its meeting last week, the bid evaluation will be complete a couple of months after the finalisation of the shareholders' agreement. By year-end, the DoD expects to get the cabinet's nod on the sale. By the end of this fiscal, inflows of funds would begin, according to official sources.

The sale of IPCL, like most other disinvestments, has been controversial right from the beginning. To begin with, Indian Oil Corporation wanted to bid, which was denied by the government on grounds that the sale of one PSU to another would not be disinvestment. So, the oil major entered into a consortium with the Soros-Chaterjee group.

Other major bidders are Reliance Industries and Mitsubishi Chemicals.Another issue that has dogged IPCL privatisation has been that of monopoly. Finance minister Yashwant Sinha and former disinvestment minister Arun Jaitley, among others, have expressed their opposition to replacing public sector monopoly with private sector monopoly. Many experts have pointed out that if Reliance get takes over IPCL it would become a monopoly player.Some DoD officials, however, believe that the fears of monopoly are misplaced. For, the products of IPCL are in the OGL list. In any case, in the post-WTO scenario it would be very difficult to charge exorbitant prices, they say.

The government holds a stake of 59.95 per cent in IPCL, which would be diluted to 51.2 per cent by 2002 if the outstanding foreign exchange currency convertible bonds (FCCBs) are fully converted.

The erstwhile Disinvestment Commission had classified IPCL as non-core and recommended the sale of 25 per cent to a strategic buyer along with the transfer of management control. The commission had insisted on retention of 26 per cent in the petrochemicals major. The panel had also warned against any eventual "market dominance by any single player."

Another precondition laid down by the sell-off panel was that the government should enter into a shareholders' agreement with the strategic buyer to ensure that, in the event of the buyer's exit from IPCL, the government's prior consent is taken, "so that the next buyer is also acceptable to government as a strategic partner."