The cookie has been stopped from crumbling for the time being. There was the distinct possibility that Haldia Petrochemicals Limited, the mascot for West Bengalís industrial renaissance, would become a non-performing asset on September 30. This danger has been averted at not the proverbial eleventh hour but the tenth. The financial institutions, led by the Industrial Development Bank of India, have agreed to a debt restructuring package. HPL has borrowed Rs 4,200 crore from banks and FIs and pays a whopping Rs 135 crore as interest every quarter. To ease the burden, the IDBI has agreed to convert a portion of its loans into equity, to a moratorium on repayment of principal for five years from the beginning of commercial production and a reduction in interest rates. This saves HPL from enormous embarrassment. The decision of IDBI is predicated upon the raising of Rs 700 crore as fresh capital by the promoters. A substantial part of this fresh capital is to come from the Gas Authority of India Limited which has promised Rs 200 crore as investment in HPL and another Rs 300 crore to a marketing tie-up. HPL has thus been salvaged but these moves can only be of a temporary nature. In fact, it can be argued that the present package that has been put on the table takes HPL further away from a more fundamental solution to the problems afflicting it.
For HPL to be really successful and become the harbinger of change and optimism in the world of investment and industry in West Bengal, it has to move away from the state to the market. The companyís equity, as it currently stands, has a very large state component: the West Bengal government holds 43 per cent of the equity. The Chatterjee Group holds another 43 per cent and the Tatas the remaining 14 per cent. This will now change with the entry of Gail. But this will not take HPL towards the market but away from it since Gail is a huge public sector undertaking. It is the state in a different avatar. Thus the HPL, even after the debt restructuring, will remain confined to an outmoded mindset. State-owned and -run business enterprises belong to the past; HPL cannot afford to look backwards. It has been saved this time and the falling back on Gail was perhaps the product of crisis and expediency. But one of its principal promoters, the West Bengal government, must work towards completely relinquishing its holdings in HPL. The government has no business being in business.