New Delhi, Jan. 31: At the meeting tomorrow with finance minister P. Chidambaram, Left leaders will put a condition for merger of state-owned banks and oil companies, a key element of the government?s reform roster.

The Left will insist that mergers be pursued only after negotiations with trade unions, where the government, other than the management, should be involved.

Its leaders also want the government to go slow on divestment of government equity from profit-making public sector units. They will oppose ?creeping divestment? by repeated sales of shares of the same company in the market.

Manmohan Singh?s allies are wary of government-owned companies raising capital through sale of shares in the market. They must have a good reason for coming out with an initial public offering of shares, especially when servicing debt is cheaper than servicing equity, the Left will argue.

It will point out that companies which have recently raised capital from the market ? and those like the National Thermal Power Corporation (NTPC) and Bharat Heavy Electricals Ltd (Bhel) that are in the pipeline ? enjoy comfortable debt-equity ratios. In other words, they do not have an indebtedness problem that they need to solve by raising equity capital.

The Left is not asking the government to stop these companies with a comfortable debt position from hitting the market but will insist on a justification for doing so.

For instance, banks, which need to tap the capital market to bolster their equity base to meet conditions for sound business health, are likely to pass the test as ?good? candidates.

The government plans to give permission to raise capital to eight banks, including Punjab National Bank, Oriental Bank of Commerce, Bank of Baroda, Punjab & Sind Bank, Allahabad Bank and Indian Bank.

Similarly, the condition of holding consultations with trade unions may not stop the spate of mergers and acquisitions the government wants to push through. The objective is to create stronger banking entities that can compete with foreign banks, which will soon have to be offered greater market access as part of global trade agreements.

Government officials said: ?They (the conditions) seem reasonable... they are in tune with the common minimum programme.?

The government is anxious to arrive at an agreement that allows it to take public sector units to the market, an interest the Left is not entirely setting in conflict with its conditions. Nor is it diluting its opposition.

The past year has seen the market value of blue-chip public sector shares zoom. Some 48 such companies experienced a 71 per cent growth in market capitalisation to Rs 604,671 crore since December 2003.

Among the top five companies with the highest capitalisation, three are state-run ?ONGC, NTPC and Indian Oil.