An inter-ministerial consultative panel has asked the Union Mines Ministry to revise the proposal to divest the Government’s residual stakes in Hindustan Zinc Ltd and Balco. The panel is currently headed by Minister of Law, IT, Telecom and Human Resources Kapil Sibal, following Finance Minister P. Chidambaram recusing himself from the panel earlier this month.

The move follows a CBI inquiry into the 2001 divestment in the two companies, particularly HZL, by the National Democratic Alliance during its rule at the Centre. The Cabinet committee will now decide on the future of the two divestments.

The inter-ministerial panel has also suggested inclusion of the Finance Ministry’s proposal to adopt the auction method for divestments. This would mean Vedanta group, which currently holds controlling stake in the two companies, would have to competitively bid for the residual 29.5 per cent in HZL and 49 per cent in Balco.

Earlier, Vedanta had made a combined offer of more than Rs 21,000 crore for the stakes in the two companies.

The Jodhpur anti-corruption branch of CBI (Delhi zone) is currently enquiring into how the then Government could have divested stake in HZL, a nationalised company incorporated under an Act of Parliament, without Parliament’s approval. HZL is an Udaipur-registered company and falls within the jurisdiction of the Jodhpur unit of the agency.

According to Ministry sources, the earlier note did not carry any reference to the CBI inquiry even though CBI had requested the Ministry for documents some months earlier. In November, when the disinvestment proposal was taken up, CBI had reminded the Ministry about its inquiry as well as its request.

The investigative agency had called for original records, such as valuation reports, approval from the Department of Disinvestment and comments of the Ministries of Mines and Law.

In 2001, Vedanta had picked up 45 per cent stake in HZL for Rs 551 crore as part of the Government’s disinvestment process.

Later, it acquired another 20 per cent through an open offer.