The Telegraph
Since 1st March, 1999
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Selloff target out of reach

Calcutta, Dec. 24: The target of raising Rs 12,000 crore from disinvestment in the current financial year will remain elusive.

“We have mobilised Rs 3,350 crore in the first nine months but do not expect to achieve the goal in the current financial year. The three-month delay in BPCL and HPCL sale has delayed the divestment process,” disinvestment minister Arun Shourie said here today.

He was in the city to address members of Indian Chamber of Commerce (ICC) on development in the north-east as the minister in-charge of the region’s affairs.

On a note of optimism, he said the next meeting of the Cabinet Committee on Disinvestment (CCD) would work out modalities of selling Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL).

Shourie said the meeting, to be held at the Prime Minister’s convenience, will take decisions on the appointment of global advisors for HPCL, and the quantum of shares to be sold in the planned BPCL floatation.

There is agreement within the ruling coalition that a part of the government’s stake in HPCL should be offered to a strategic partner. By contrast, BPCL would be privatised by issuing additional shares in the market.

The disinvestment ministry, Shourie said, has apprised the petroleum ministry — which holds the reins of the two companies — about its views on the selloff.

The Bina and Bhatinda refineries, which are owned by BPCL and HPCL respectively, have been declared uneconomical by the petroleum ministry in the Tenth Plan, the minister said. “CCD will decide whether the two refineries will be hived off before disinvestment. It has to be seen whether the uneconomic refineries depress the oil majors’ share prices,” he added.

Asked about his ministry’s views on the extent of equity dilution in HPCL and BPCL, Shourie declined to say anything. In HPCL, where the government already holds 51 per cent, it would be meaningless to bring the stake down to 49 per cent since no partner would like to acquire control with 2 per cent of the equity. “CCD will, therefore, have to decide whether it should be brought down to 26 per cent or 49 per cent from the present level of 51 per cent."

Commenting on the privatisation of Shipping Corporation of India he said that the matter will also come up for discussion in the next CCD meeting. “We expect to call bids soon.”

Shourie, also the commerce minister now, said the government has set a target of 12 per cent growth in exports.

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