The Telegraph
Since 1st March, 1999
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Party behind govt on oil selloff

In Thiruvananthapuram, party chief Venkaiah Naidu was quoted as saying: “BJP is of the firm view that disinvestment has brought efficiency and growth.”

Disinvestment minister Arun Shourie said in a TV interview that “certain elements” in the government opposed oil sector disinvestment because of its “presumed strategic importance”. “Everything in India is strategic,” he declared.

Asked to respond to Fernandes’ views, Jaitley said: “I have seen his statement. When a senior leader like him says something, every word we will take seriously.” But he also made it clear that while an NDA member had the right to his opinion, the final decision would be left to the government.

Indeed, the former disinvestment minister’s argument was that too much of a fuss was being made over Fernandes’ “dissent”. “It is accepted by one and all that disinvestment programmes should never create monopolies. Second, all programmes and policies of the government must be continuously reviewed,” he said. Fernandes had stressed both points on Sunday.

Speaking in support of the government’s policy of going in for strategic sale of a large chunk of shares to one entity, Jaitley said: “This had an obvious advantage.” It fetches a higher price.

“An additional advantage of strategic sales is a change in the management — private and professional managements, which would run enterprises on business considerations, came into control of these establishments,” he added.

Jaitley summarised the success of the policy thus:

n Private managements pay higher salaries to employees, as in Modern Food and Balco

n Productivity has expanded several times

n Share prices of privatised companies have increased 300 to 400 per cent.

Despite the official backing, a section in the BJP is upset with the “security angle” that has cropped up over holding strategic oil reserves to cope with emergencies like a war. Some, like Fernandes, argue that if HPCL and BPCL went into private hands, the government would not be able to force them to keep such reserves.

Sources said the RSS leadership shares the apprehension and has reportedly conveyed it to deputy Prime Minister L.K. Advani. The sources said: “If there is one issue the BJP and the RSS are identified with, it is national security. BJP cannot be projected as a party which is not committed to security.”

To circumvent the “security” objection, this section has suggested that if the government is determined to sell HPCL and BPCL, it could mandate privatised companies to give a certain percentage of their output in an emergency. The other option is to allow financial institutions to purchase 51 per cent of the shares so that the government can indirectly control the companies.

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