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Tuesday, Dec 10, 2002

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No time-frame set for BPCL, HPCL sell-off

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THE Government will sell its shares in Bharat Petroleum Corporation Ltd (BPCL) through the public offer route while Hindustan Petroleum Corporation Ltd (HPCL) would be privatised through a strategic sale, the Union Minister of Disinvestment, Mr Arun Shourie, announced in both Houses of Parliament here on Monday, settling a dispute which had seen a vertical split in the Vajpayee Government for several months.

The Disinvestment Minister said the Government would ensure that disinvestment did not result in creation of private monopolies. It would address this crucial aspect of disinvestment, raised by the Defence Minister, Mr George Fernandes, and the Petroleum Minister, Mr Ram Naik, through the enactment of Competition Bill, 2002, which was cleared by the Union Cabinet recently. The Government, however, had not set a time-frame for divestment in these two firms as the modalities on the quantum of strategic sale and public offer would now have to be finalised and submitted to the Cabinet Committee on Disinvestment (CCD) for approval. The decision is seen as a partial victory for those opposed to the strategic sale of Government equity in the two state-owned oil majors. This has forced the Ministry of Disinvestment to adopt the middle path and agree for sale of shares through public offer in BPCL and strategic sale in HPCL, climbing down from its earlier stand of strategic sale in both the oil companies. The concern raised by those opposed to the strategic sale of oil companies had in September led the CCD to announce a three-month moratorium on taking a view on disinvestment in these companies, which ended on December 7.

At a meeting chaired by the Prime Minister, Mr A.B. Vajpayee, on December 6, the Government also decided to fine-tune the disinvestment policy and programme to placate the anti-disinvestment group within the National Democratic Alliance (NDA).

Mr Shourie stated the Government's efforts would be to ensure that disinvestment did not lead to alienation of national assets, which, even after divestment would remain where they were.

In his statement, Mr Shourie also said that the Government would set up a separate Disinvestment Proceeds Fund to provide complete visibility to the Government's continued commitment to utilisation of disinvestment proceeds for social and infrastructure sectors rather than for bridging the fiscal deficit.

Without referring to the controversy surrounding the three-stage divestment process in National Aluminium Company Ltd (Nalco), Mr Shourie said that the Ministries of Finance and Disinvestment would work out guidelines for the disinvestment of natural asset companies in sectors such as coal and mines. These guidelines are proposed to cover PSUs like Nalco, Manganese Ore (India) Ltd, Neyveli Lignite Corporation Ltd and a host of coal companies owned by Coal India Ltd.

Mr Shourie did not clarify whether the ongoing disinvestment process in Nalco and Manganese Ore would be put on hold till the guidelines were finalised by the two Ministries.

Finally, Mr Shourie said that the Finance Ministry would prepare for the consideration of the CCD a paper on the feasibility and modalities of setting up an asset management company. The Minister did not elaborate on the compromise formula thrashed out and was also silent on allowing ONGC, GAIL and Iffco-Kribhco to bid for HPCL when it is put up for strategic sale.

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