New Delhi, Dec. 5: The government today hammered out a compromise formula on disinvestment at an informal meeting held at the Prime Minister’s residence soon after a sitting of the full Cabinet.
The accord came two days before a Cabinet-imposed three-month deadline that put the disinvestment process in the freezer till December 7 to allow tempers to cool over what had become a sharply divisive issue for the Vajpayee-led government.
The main objections to disinvestment had been over what opponents like defence minister George Fernandes saw as a blatant attempt to sell off the family silver to private companies through the so-called strategic route under which the government concedes management control of a public sector unit to a single private investor.
Today’s meeting was chaired by Prime Minister Atal Bihari Vajpayee and attended by his deputy L.K. Advani, the defence minister, finance minister Jaswant Singh, petroleum minister Ram Naik and disinvestment minister Arun Shourie.
The meeting resolved that it would pay heed to Fernandes’ objections to a “mindless policy of strategic sales” by conceding that certain “strategic” companies be kept in the government’s control and the selloff at a later stage would be done only through public offerings.
However, other PSUs will continue to be sold through the strategic route. The gridlock over the selloff process arose over the sale of the government’s stake in two oil companies — Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.
The meeting is believed to have decided that the 51 per cent stake in HPCL will be sold through the strategic route to a single bidder or a consortium of bidders. BPCL, on the other hand, will be sold through the IPO route to small shareholders. The sale will have strings which will disallow any predatory accumulation of shares at a later stage by any single company.
Although this will turn BPCL into a board-managed company, the government will remain the single largest shareholder. This was agreed after the detractors of the selloff process pointed out that it was essential that the government had a significant stake in the oil sector, which turns from a normal economic activity into a strategic one during times of war.
Today’s meeting was seen as an attempt by the Prime Minister to stamp his authority on decision-making after Advani failed to broker a consensus.
After coming out of the meeting, Shourie said: “A unanimous view was arrived at and reported to the Prime Minister. The Prime Minister directed me to make a statement about it in Parliament.” He refused to elaborate as Parliament was in session.