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Selloff truce leaves traces of torment

New Delhi, Dec. 6: In the peace brokered over the contentious issue of divestment, the two warring sides in the Vajpayee Cabinet have had to make concessions with disinvestment minister Arun Shourie appearing to emerge the worse for it.

Although details of the compromise worked out at yesterday’s meeting of senior ministers have not been made public yet, it seems Shourie not only had to concede the demand that certain public sector units could only be sold through an equity offer to the public, but also had to agree to allow one government-owned company to bid for another.

At a meeting held about three months ago, it was decided that public sector units would not be permitted to bid for each other without Cabinet approval. But this is now likely to be relaxed, though with riders to prevent monopoly.

One of the proposals that has been bandied about is that state-owned units like ONGC could form a consortium with a foreign company — Shell or British Petroleum, for instance — to bid for Hindustan Petroleum, which is likely to be sold by auction.

Defence minister George Fernandes, who had made impassioned pleas for an end to strategic sales — euphemism for auction — had to adjust his moral posturing by accepting that such a method would continue, though not in all cases.

He had earlier described strategic sale as “handing over entities created with the wealth of the people to further enrich the already rich”.

Ministers also agreed to take note of concerns that divestment contracts have loopholes which allow new owners to siphon off reserves (the Tatas took out VSNL money) as well as sell the purchased entities (Batra Hospitality sold Centaur hotel).

New clauses are expected to be introduced to ensure neither of these can be done without government consent.

Petroleum minister Ram Naik has also been able to get the Prime Minister to agree to give public sector units freedom to raise capital from the market for modernisation or growth even if they are up for divestment.

For the Big Two, it was advantage Atal Bihari Vajpayee as it was the Prime Minister who finally brokered the peace and not his deputy.

But Lal Krishna Advani in the process showed that he could get Cabinet policies on such key issues as divestment, which do not fall under his purview, diluted if he put his mind to it.

Despite the solutions being put in place, the dispute proved that the BJP-led government remains a house divided where a war over another set of reforms can break out any other day.

The decisions taken yesterday are likely to be formalised at a meeting of the Cabinet committee on divestment after the Gujarat polls on December 12.

Before that a group of secretaries will meet on Wednesday to put the decisions in a format acceptable to their political masters.

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Besides two oil companies — Hindustan Petroleum and Bharat Petroleum — the group is likely to take up Hindustan Cables, Cochin Shipyards, Manganese Ore India, Hindustan Teleprinters, National Instrumentation, Hindustan Organics, Nepa Ltd, Hindustan Shipyards and Central Inland Water Transport Corporation.

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