Financial Daily from THE HINDU group of publications
Thursday, Dec 12, 2002
Industry & Economy - Disinvestment
EIL sell-off set for smooth course
NEW DELHI, Dec. 11
THE cloud of uncertainty surrounding the privatisation of Engineers India Ltd (EIL), the engineering and consultancy major, has been lifted with the Union Government deciding to sort out the controversy over disinvestment in HPCL and BPCL.
Following the Government's decision to disinvest its equity in the two oil companies - one through strategic sale (HPCL) and the other through public offer (BPCL) - the Ministry of Disinvestment has withdrawn its earlier proposal to put the privatisation of EIL on hold till such time as the Government took a final view on disinvestment in the oil firms.
"In the changed circumstances, the Disinvestment Ministry withdrew the note seeking an approval from the Core Group of Secretaries on Disinvestment at its meeting held here on Wednesday to put EIL sale on hold," Government sources said. The sale process in EIL would now be taken forward as there were no issues involved, brightening the chances of concluding the deal this fiscal, the sources said.
Strangely, the Disinvestment Ministry has favoured allowing PSUs such as BHEL, ONGC and GAIL to bid for EIL. It had always taken the stand that allowing one PSU to bid for another PSU could not be termed as actual privatisation.
While ONGC has joined hands with BHEL in a 51-49 per cent joint venture, GAIL has tied up with construction major L&T to bid for EIL.
Sources said that the decision taken by the Cabinet Committee on Disinvestment (CCD) on September 7 to ban PSUs and co-operatives to bid for other PSUs was not applicable in the case of EIL.
ONGC-BHEL and GAIL-L&T had submitted their expressions of interest for EIL before the CCD took the decision. "Even if the decision is to be applied retrospectively in EIL, these entities can always be allowed to bid by seeking a special dispensation from the CCD through the administrative Ministry concerned," the sources said.
But, the Disinvestment Ministry has not objected to the bid of ONGC-BHEL and GAIL-L&T, paving the way for a hassle-free process of privatisation of EIL in which the shortlisted bidders have completed their due diligence of the company.
The Government is selling 51 per cent of its shareholding of 90.40 per cent in EIL through strategic sale with transfer of management control.
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