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Bengal calls off stake sale in HPL

Purnendu Chatterjee in Calcutta on Thursday. Picture by Kishor Roy Chowdhury

Calcutta, June 19: The Bengal government has terminated the stake sale process in Haldia Petrochemicals (HPL), drawing the curtains over a year-long process marred by controversies and legal wrangle.

The state has informed Indian Oil Corporation, which emerged as the lone valid bidder, about its decision last night. The government cited legal issues for cancelling the bid. The navaratna PSU had offered around Rs 1,710 crore for its stake in HPL.

The move paves the way for HPL’s existing private promoter, The Chatterjee Group (TCG), taking control of Bengal’s showpiece industrial project.

Sources in Indian Oil said the company was unlikely to legally confront the government’s decision even though they expressed disappointment over the development.

However, a source in the Bengal government played down the decision.

“It was Indian Oil that pulled out of the race. It had written a letter before the elections, saying the company was no longer interested. Since there was no other bidder, scrapping the divestment process was just a mere formality,” the source said.

IOC officials said the PSU had written a letter in March to the West Bengal Industrial Development Corporation, in which it raised concerns over the inordinate delay in concluding the deal. IOC’s bid to buy shares at Rs 25.10 apiece was opened on October 10, 2013. The PSU in the letter had indicated that the price quoted in the tender “may not be valid” because of the heavy losses suffered by HPL in the interim period.

“Nowhere did we say that IOC is not interested,” an IOC source said. The PSU continues to hold an 8.89 per cent stake in the company.

After the bid was opened, TCG challenged the decision of the state government in various courts and effectively stalled the process.

After Bengal finance minister Amit Mitra took charge of the industry department in December 2013, a reconciliation process began with TCG. The state decided to sell its shares to TCG in March and ratified the decision in the cabinet earlier this month though it is yet to be made public.

Today, after the HPL board meet, TCG chairman Purnendu Chatterjee dropped a broad hint on rapprochement.

On when TCG would take over, Chatterjee said: “It all takes time.” He also confirmed that the term of the incumbent managing director Uttam Basu, ending this June, has been extended.

 
 
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