The Telegraph
Since 1st March, 1999
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The effort to privatize does not die easy. One means the more visible and high value ones. Not the likes of the State Trading Corporation, Engineers India Limited, Balmer Lawrie, Tide Water Oil, Hindustan Newsprint and Hooghly Printing Press, cleared for sale in a recent cabinet committee on disinvestment meeting. De facto, high visibility privatization has become equated with the oil and gas sector. The disinvestment ministry also wanted to file a review petition against the Supreme Courtís decision on the Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited case. The CCD shot this idea down because the government did not want to confront the judiciary. Nor was the government ready with material for a review petition, given the deadline of October 16. In any event, a review petition was unlikely to have led to a reversal. Since the Supreme Court objected to clauses in the nationalization acts under which HPCL and BPCL were created, hypothetically a repeal bill could have been pushed through Parliament, with the government possessing a thin majority even in the Rajya Sabha now. Dissonance within the National Democratic Alliance ranks prevents this. The Shiv Sena may be the most visible opponent, but is not the only one. Hence, this option gets knocked back till after the general elections. Failing this, the disinvestment minister has come up with a package for Indian Oil Corporation disinvestment, reversing an earlier cabinet decision to stay away from the IOC, Oil and Natural Gas Corporation and Gas Authority of India Limited.

With the IOC not having been created through a parliamentary act, executive unbundling and sale will clearly not violate the court verdict. An executive decision to split the IOC into two or three parts (such as breaking up refining and marketing) is indeed possible. Nor will the proposed swap of IOC assets with HPCL or BPCL cause problems, especially if Mr Ram Naik is brought in, as he is bound to be. However, this is not genuine privatization. Mr Arun Shourie will argue that the remaining IOC assets will be privatized through strategic sales and initial public offers. That is the fly in the ointment. Were strategic sales actually to take place, the disinvestment minister could legitimately argue that disinvestment has encountered a comma, not a full stop. However, opposition to privatization is primarily about the strategic sales route, not about minority sales through IPOs. Hence, arguments about the oil sector being strategic and non-transparency of strategic sales will surface yet again. Mr Shourie rightly drew a line between earlier attempts at false privatization through minority-stake disinvestment and present attempts at genuine privatization. The legerdemain about IOC cannot hide the fact that genuine privatization has encountered at least a semi-colon.

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