The Telegraph
Since 1st March, 1999
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Impasse on sale of natural asset PSUs

New Delhi, April 4: The core group of secretaries on disinvestment (CGD), which met here to discuss the policy on sale of natural asset companies, hit a deadlock as ministries controlling natural asset firms such as petroleum ministry and ministry of mines opposed selloff in these companies at this stage.

The government had decided to review the policy on the sale of natural asset companies, which included oil and gas exploration and ore mining after vociferous protests within the ruling NDA alliance. Protesting ministers had pointed out that these were strategic resources and should either not be sold off or should be sold to the public at large so that no single corporate entity, especially multinationals, gets control of these vital assets.

The contention given by administrative ministries is that the issue needs to be studied in more detail as many of these companies control minerals considered strategic by most nations. This hard line led to a stand-off.

At the meeting, however, the core group cleared draft transaction documents for three companies Tide Water Oil, Hoogly Printing and Hindustan Newsprint. The sale of stake in these companies would now be taken up by the Cabinet Committee on Disinvestment.

In Hoogly Printing, the parent company Andrew Yule with 100 per cent stake, will offload its entire holding. In Tide Water Oil, 41.8 per cent stake will be divested. The successful bidder will then be required to make an open offer for additional 20 per cent stake in the open market.

In the Kerala-based Hindustan Newsprint, 74 per cent will be divested through a strategic sale. The balance will be held by Hindustan Paper Corporation.

The CGD has also cleared the bids received for Palghat unit of Instrumentation Control Valves Ltd, a subsidiary of Instrumentation Ltd. The group also taken up for discussion the divestment of National Buildings Construction Company (NBCC).

Earlier this year, the disinvestment commission has suggested the government to sell off 74 per cent stake of its 100 per cent shareholding in NBCC to a strategic partner and retaining 26 per cent for three years.

The government had earlier said that it was divesting stake in NBCC as there was no social benefits from future associations due to existence of employment opportunities. CGD is known to have accepted the recommendations of the disinvestment commission on NBCC privatisation and the matter could now be taken at the CCD, sources said.

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