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Big Four meet cracks open oil-bid door for PSUs

New Delhi, Sept. 3: The spat over the selloff policy appears to have blown over.

The Fab Four in the NDA coalition — Atal Bihari Vajpayee, L.K. Advani, George Fernandes and Jaswant Singh — today met to discuss the defence minister’s objections to the way the government was getting rid of its crown jewels.

It now appears that the government will remove a major sticking point in the fractious debate over the privatisation plan by allowing state-owned enterprises to bid for the stake in oil PSUs that it wants to put on the block.

Fernandes’ fulminations over the modalities of the selloff policy had sent the government into a tizzy and today’s meeting was an attempt to soothe the Samata Party leader who has denounced the policy as an attempt to create “private monopolies”.

The government is also expected to draw up guidelines to ensure a degree of continued control over public sector companies in certain key sectors like oil and telecom.

Fernandes has been campaigning against the policy of going in for strategic sales of PSUs, a policy that the Prime Minister did not seem ready to jettison at today’s meeting.

The taciturn socialist in the BJP ministry has also been supporting demands by oil PSUs that they be allowed to bid for state-run petroleum marketers like HPCL and BPCL which are being put on the block.

These oil companies have been arguing that besides the fact that they should be allowed a level playing field, the country’s security could best be ensured by allowing the state to retain control over certain strategic raw materials. This was a demand that seems to have been agreed upon at today’s meeting.

The Fab Four also agreed that even if private sector bidders succeeded, the government should ensure a degree of government control especially in times of emergency so that strategic services like telecom and raw materials like oil and aluminium can be commandeered for state needs. It was also agreed that this could best be done through appropriate legislation.

Besides, the government will ensure that it is able to keep an eye on the developments in these sectors by retaining government holdings and directors. Officials said it could take the form of the government’s arrangement with the Tatas that allowed it to have a nominee director on the Tisco board till the 1980s. However, the meeting did not resolve other contentious issues like creation of super-monopolies in certain sectors, raised informally by certain Cabinet ministers.

Several ministers, including Arun Shourie, oppose the idea of PSUs bidding for state-run petroleum marketers on the ground that this would allow oil giants like Indian Oil Corporation to perpetuate their monopolies, something that the government is loath to allow.

Those in favour of PSU bidding have argued that the government’s own stated view in the draft competition law — which is supposed to replace the Monopolies and Restrictive Trade Practices Commission Act — is that monopolies per se are not harmful, rather the abuse of monopoly is.

Officially, finance minister Jaswant Singh told reporters outside South Block where the meeting was held that the Big Four discussed not just disinvestment but also “topics relating to economic policy, foreign policy, some security-related matters”. He, however, declined to give details of the discussions.

The meeting was also told that the disinvestment ministry foresaw that it could raise upwards of Rs 25,000-30,000 crore through the various oil sector strategic and non-strategic sales.

Today’s meeting came about after Fernandes came out against the disinvestment process through a letter to the Prime Minister where he raised security concerns among other things. The defence minister’s protest note and petroleum minister Ram Naik’s visit to Brazil forced the postponement of a crucial meeting of the Cabinet Committee on Disinvestment, which was slated to be held last week to September 7.

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