The Telegraph
Since 1st March, 1999
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PSUs may miss selloff bus

New Delhi, Aug 30: The disinvestment ministry is likely to bar public sector units from bidding for other state-owned companies that are being put on the block as part of the government’s selloff programme.

A final decision in this respect is expected to be taken at the meeting of the Cabinet Committee on Disinvestment (CCD) to be held in the first week of September.

The move will stymie companies like Oil and Natural Gas Corporation (ONGC) from bidding for state-owned oil companies like Hindustan Petroleum and Bharat Petroleum which are next on Arun Shourie’s list if he is able to work around petroleum minister Ram Naik’s reservations over the modalities of the selloff, especially the chicken-and-egg sort of debate over who should get the government’s stake first—a strategic investor or the general public.

Sources in the department of disinvestment said, “The suggestion (to bar PSUs from the bidding process) was first made by the committee of secretaries and has not been altered by the finance ministry. The matter is now before the petroleum ministry which has indicated that it too would not like to stonewall the decision to bar state-owned companies from the selloff process.”

The move to bar state-owned companies from bidding for the ones that were being put up for sale gathered momentum in April this year after Indian Oil Corporation (IOC) pipped Reliance to grab IBP, the first of the three state-owned oil companies in which the government was selling its stake to a strategic investor.

Soon after the IBP sale, it was decided that IOC would not be allowed to bid for HPCL and BPCL. This has now crystallised into a blanket ban on PSU takeover of other state-owned companies on the ground that it negates the very concept of privatisation that the government intends to usher in.

Sources said, “The government will now have to take a firm stand on PSUs bidding for other state-owned companies as this would amount to squandering public money and curtailing competition.”

“The acquisition of one PSU by another in the oil sector would create monopolies which would be difficult to manage. There are many instances worldwide where monopolies once created are difficult to mange and control,” sources added.

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