Week in review

Updated: May 26 2002, 05:30am hrs
Reliance Outbids IOC, Nirma
The government has approved sale of its 26 per cent stake in Indian Petrochemicals Corporation Limited (IPCL) to country’s largest petrochemical company Reliance Industries for Rs 1,440 crore.

Reliance scored over state-run refiner Indian Oil Corporation (IOC) and detergent maker Nirma to bag India’s second largest petrochemical company for a price of about Rs 231 per share.

The government, which presently has 59.95 per cent equity in IPCL, has decided to offload 51 per cent stake in two phases.

It would transfer management control to Reliance for 26 per cent stake initially and the new partner would have the right of refusal over the remaining 25 per cent equity.

An agreement between Reliance Industries and the government was signed for acquisition of 26 per cent stake of government in petrochemical PSU IPCL along with management control for a total of Rs 1,490 crore.

The financial transaction would be completed on June 4 after which the government would transfer its holding to Reliance to make the Mumbai-based corporate house a partner in IPCL.

The agreement was signed by K P Nanavati on behalf of Reliance Industries, while joint secretary in petrochemical ministry Ashok Chawla, who is also acting chairman and managing director of IPCL, represented the government. IPCL director (Finance) S Shah was the third signatory to the agreement.

Only RBI-Regulated Entities To Deal In Demat
The Reserve Bank of India has made it mandatory for all entities regulated by it to keep their government securities in dematerialised form with immediate effect in the light of the recent G-Secs scam.

“In the light of the recent fraudulent transactions in the guise of G-Secs transactions in physical format by a few co-operative banks with the help of some broker entities, it is now proposed to accelerate the measures under contemplation for further reducing the scope for trading in physical form,” RBI said in a notification issued on Monday to all entities regulated by it.

As a result of the RBI’s condition, henceforth, market participants dealing with gilts will have to open either a subsidiary general ledger account (SGL) with the RBI or a constituent SGL with a bank or some other entities. Participants will also require to open a fund account with the bank to correspondingly debit or credit as and when they buy or sell gilts from SGL. The condition set by the RBI is applicable to FIs, primary dealers, cooperative banks, regional banks, local area banks, and non-banking financial companies.

Ways To Tackle Terrorism Discussed
India and Iran have discussed ways and means to tackle the problem of terrorism and explored possibility of cooperation in energy, information technology and other key sectors. Participating in the 12th joint commission meeting (JCM), Iranian foreign minister Kamal Kharrazi condemned the May 14 Kaluchak massacre and “understood” the problem of cross-border terrorism being faced by India. During wide-ranging talks on bilateral, regional and international issues of mutual interest, external affairs minister Jaswant Singh sensitised Mr Kharrazi on the current Indo-Pak tension. Besides, they also discussed the latest developments in Afghanistan, including reconstruction of the war-ravaged country.

The two sides also agreed to expedite work on the north-south trade corridor linking India with Russia through Iran to give a boost to trade with Europe, an external affairs ministry spokesperson said. They identified energy, information technology, small scale industry, petrochemicals, textiles, railways and certain other sectors for cooperation.

Both sides also discussed the proposed pipeline from Iran to India for supply of natural gas. The issue whether the pipeline should come via Pakistan or should be under water is currently under consideration of the two countries. Mr Kharrazi, who is leading a large delegation, was on a two-day visit to India.

Hurriyat Leader Abdul Gani Lone Killed
In a serious blow to the moderate voice in the separatist Hurriyat Conference, senior leader Abdul Gani Lone was shot dead by unidentified gunmen on the evening of May 21, a day ahead of the visit of Prime minister Atal Behari Vajpayee to Kashmir. One of Lone’s gunmen Mushtaq Ahmed was also killed and another injured.

Two assailants in police uniform opened fire during a rally to mark the 12th death anniversary of former Mirwaiz of Kashmir Maulvi Mohammad Farooq, father of Hurriyat leader Umar Farooq, at Idgah ground in old Srinagar city. He was rushed to the Soura Medical Institute where he was declared “brought dead”. The assailants also lobbed a grenade which failed to explode, official sources said. At least seven people were injured in the attack.

Lone was a minister in the Congress government in Jammu and Kashmir from 1964 to 1975. He floated his own political party, Jammu Kashmir People’s Conference, after Sheikh Mohammed Abdullah came to power in 1975, and sat in the opposition, winning the 1977 assembly elections.

He joined the Hurriyat in 1993. He is survived by wife, two sons and a daughter.

One of his sons is married to the daughter of Pakistan-based JKLF leader Amanullah Khan.

India to get $6 billion in next three years
Asian Development Bank has agreed to double its assistance to India to $ 2 billion annually for the next three years. “The programme that has been decided in consultation with the finance ministry is to provide $ 6 billion assistance during 2003-05, of which 75-80 per cent will be for infrastructure,” ADB deputy director general J K Lee said in New Delhi.

The total assistance package which works out to be Rs 30,000 crore during 2003-05 would be for 28 projects. The main areas which would receive ADB loans are highways and rural roads, power and hydro-carbon sector, railways, inland waterways and social services sector, Mr Lee said.

In addition, ADB will provide Rs 100 crore of grants for technical assistance including the proposal to assist India to set up an asset reconstruction company for tackling the non-performing assets in the banking sector running into Rs 60,000 crore.

ADB, which has been providing India loan assistance of $ 1 billion annually for the last three years, decided to step up its exposure in a bid to achieve the shared goal of poverty elimination through higher growth, Mr Lee said. Forecasting a strong economic recovery in the medium term, he said ADB’s country assistance strategy would aim at poverty reduction through high growth which would entail assistance for improving social services like water supply and sewerage. He, however, said that the economic recovery could be sustained if there was fiscal consolidation both at the centre and the states.