The Telegraph
Since 1st March, 1999
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British Petro keyed up for HPCL scan

Mumbai, Sept. 11: British Petroleum (BP) will undertake due diligence of Hindustan Petroleum Corporation Ltd (HPCL) from Friday.

However, a confirmation of this development could not be obtained as sources refused to comment citing confidentiality clauses. Reliance Industries (RIL) has already completed a similar exercise.

The start of BG’s due diligence could coincide with a possible Supreme Court order on the selloff in oil firms. This resulted in the HPCL counter exhibiting an unusual strength at a time when the undertone was that of profit booking.

Opening at Rs 415, the scrip shot to a day’s high of Rs 429.10 after which it closed at Rs 425.30, a gain of Rs 9.10 or 2.18 per cent.

While the Supreme Court had earlier heard a petition filed by the Oil Sector Officers’ Association, it had postponed its judgement to a later date. During the hearing, the counsel for the petitioners had argued that since HPCL was set up by an act of Parliament, its disinvestment also required an approval from Parliament.

The counsel representing the government and HPCL, on the other hand, had argued that HPCL’s creation was partly constitutional and partly achieved by a merger of four oil companies. As a result, there was no need for a parliamentary approval. This view was backed by Attorney-General Soli Sorabjee.

Earlier, agitating HPCL employees had stalled RIL officials from conducting a due diligence at its Mumbai refinery. The employees are of the view that the due diligence should not begin till the Supreme Court gives its verdict on the selloff issue.

The government is planning to offload its 34.01 per cent stake in HPCL to a strategic partner, while 5 per cent will be offered to employees. After the disinvestment, the government’s stake in the company will be reduced to 12 per cent.

Other contenders for the government's pie include Petronas of Malaysia, Essar Oil, Kuwait Petroleum and Shell.

According to the initial schedule laid out by lead manager HSBC, the bidders’ visit to the data room and the refineries will be over by October 4 and the last date for all visits by bidders for marketing terminals is mid-October.

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