Confusion Over Oil Cos Selloff

New Delhi, December 24: | Updated: Dec 25 2002, 05:30am hrs
Even after having evolved a compromise formula over oil sector privatisation, the government is confused over the contentious issue. Though the cabinet committee on disinvestment (CCD) is scheduled to meet on Friday, there is no clarity whether or not the issue of divestment in Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) will come up at the important meeting.

Official sources told FE that disinvestment in Shipping Corporation of India (SCI), National Aluminium Company (Nalco), HPCL and BPCL does not figure on the agenda of the CCD meeting on Friday. SCI and Nalco were listed as big-ticket privatisations for this fiscal.

According to PTI, however, disinvestment minister Arun Shourie said in Kolkata that the next CCD meeting would discuss sell-off modalities in HPCL and BPCL.

Mr Shourie said that the next CCD meet would decide on issues of appointment of global advisors for HPCL and the extent of equity dilution for BPCL through an initial public offer (IPO).

It may be recalled that Mr Shourie had announced the compromise formula on oil sector divestment in Parliament on December 9. The formula was worked out by Prime Minister Atal Bihari Vajpayee in consultation with concerned ministers on December 6. As per the formula, while disinvestment in HPCL would take the strategic sale route, in the case of BPCL the shares will be offered to the public.

Neither Mr Shourie nor disinvestment secretary Pradip Baijal was available for comment on the fate of sale of government equity in HPCL and BPCL.

With the omission of HPCL, BPCL, SCI and Nalco from the agenda of the CCD meet, only minor public sector undertakings (PSUs) would be discussed. So CCD would deliberate on companies such as Balmer Lawrie, Nepa, Hindustan Insecticides Ltd (HIL), Hindustan Shipyard Ltd (HSL) and Cochin Shipyard Ltd (CSL).

The CCD will take a view whether to sell Balmer Lawrie as a combined entity or hive it off into separate business entities prior to sell-off, as suggested by some prospective buyers. The CCD will also deliberate upon strategic sale of HSL and CSL.

Meanwhile the government has sought the opinion of attorney general Soli Sorabjee whether it would be legally tenable to privatise HPCL. Opposition members had said that HPCL or BPCL could not be privatised without legislative approval because they were nationalised by an Act of Parliament.

Mr Shourie responded, saying that there was precedent of companies being formed by Acts of Parliament and privatised without legislative sanction. He had cited the case of Maruti Udyog Ltd. He, however, agreed to get the issue reviewed by the attorney general.