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Golden share rule for Shipping Corp selloff

New Delhi, Jan. 28: The government wants to bring in a provision for a ‘golden share’, in a diluted form, while selling the Shipping Corporation of India (SCI) off to a strategic partner.

The ‘golden share’ provision will give the government the right to control assets in times of emergency such as a war in West Asia or hostilities with Pakistan.

This means that though the government may dilute its equity holding in the country’s principal shipping line to below 26 per cent, it will still exercise control over its board in matters such as the use of its ships and tankers in times of emergency.

This is being done as several Cabinet ministers have protested that SCI carries most of the oil and other strategic material imported by the country and the government needs to retain control over it in situations like the current crisis in West Asia.

Top disinvestment ministry sources said the agreement concluding the sale, which is to be taken up this calendar year, will have clauses that will ensure that the government retains a ‘golden share’ in the shipping giant that will give it a veto power to stymie unpalatable decisions.

The government is being forced to take this route as India’s company law does not permit the ‘golden share’ concept in its pure form nor does it allow any shareholder to retain control over the board’s decisions once the shareholder’s holding has come down to below 26 per cent.

Objections to the sale which were earlier raised by the shipping ministry are being dropped and the SCI sale is likely to be taken up at a Cabinet Committee on Disinvestment (CCD) meeting soon. Ironically, the SCI selloff is being pushed now because the shipping liner is doing better now that charter charges for oil tankers that it owns has shot up by about 15-20 per cent.

Officials said “this kind of ‘golden share’ control may be retained through various legal strategems in several other similar sales — such as when we sell our airlines. These have national security angles which surface only in times of emergency. Air-India and Indian Airlines planes are always needed in war times even if it be to evacuate Indians stranded on foreign soil when a war has broken out.”

The move to retain a certain degree of control over these companies has the support of both the Prime Minister and his deputy, sources claimed. The disinvestment ministry had virtually gone into hibernation after a major row within the Cabinet had stalled the selloff process in oil majors — HPCL and BPCL. But now that the CCD has cleared the sale of the two oil PSUs, it has once again kick-started the process of cherry-picking PSUs for the selloff process.

Sources said besides SCI, the disinvestment ministry was keen that the CCD clears the sale of a 51 per cent strategic stake sale in Indian Control Valves Ltd, a 32.6 per cent strategic sale in Hindustan Organics Ltd, as well as selloffs in Nepa, Central Inland Waterways Ltd and Chefair, a part of the Hotels Corporation of India.

It also wants to push through in principle selloff decisions in Cochin Shipyards and Hindustan Shipyards Ltd, Bharat Brakes and Valves Ltd and Hindustan Insecticides.

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