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Wednesday, Jul 10, 2002

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Selling blue-chip PSU stake — Ministry may opt for public offer route

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THE Ministry of Disinvestment has stated its intention to adopt the public offer route for selling Government stakes in blue-chip PSUs like Indian Oil Corporation, Oil & Natural Gas Corporation Ltd (ONGC), Gas Authority of India Ltd (GAIL), Bharat Sanchar Nigam Ltd (BSNL) and National Thermal Power Corporation (NTPC), in a bid to raise about Rs 25,000 crore by cashing in on the galloping market prices of PSU shares.

"The Disinvestment Minister, Mr Arun Shourie, is expected to make a presentation before the Prime Minister, Mr A.B. Vajpayee, at the next meeting of the Cabinet Committee on Disinvestment outlining the plans to hawk Government stake in these companies in the market,'' Government sources said.

In fact, the sources said that Mr Shourie had already conveyed his plans on resorting to market offerings in the above-mentioned blue chip PSUs to the new Finance Minister, Mr Jaswant Singh, as part of a larger exercise to meet the divestment target of Rs 12,000 crore set for the current fiscal.

The public offer plan, however, goes against the much-stated position of the Disinvestment Ministry to go for strategic sales while privatising Government companies since it offered far greater advantages than market offerings.

Mr Shourie had even gone on record last week stating that "great public offerings in a thin market would pull down the prices of PSU shares being sold ''.

Moreover, the Divestment Ministry had put on record its objections to the proposal mooted by the Union Petroleum Ministry to go for an initial public offering in Bharat Petroleum Corporation Ltd (BPCL) when an "in-principle'' decision was taken by the CCD to privatise the oil refining company.

Against this backdrop, the Divestment Ministry's thinking to sell Government stakes in IOC, ONGC, GAIL, BSNL and NTPC comes as a surprise.

However, Government sources explained that the public offer plan was aimed at honouring an earlier CCD decision on IOC, ONGC and GAIL while at the same time selling minority stakes in these entities to rake in good money.

The CCD had earlier decided that the three oil companies would remain under the Government fold for sometime to come without the Government stake falling below the 51 per cent level.

"As such, there is no point in pursuing strategic sales in these three oil companies.

At best, what we can do is to sell shares to the public and reduce the Government's stake to 51 per cent and mop up money in the process,'' the sources said.

The presentation also involves a suggestion to draw down huge reserves piled up by these companies as was done in the case of VSNL before the company was privatised.

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