New Delhi, Dec. 7: Public sector companies will have to seek special permission from the authorities if they wish to bid for state-owned companies that are being put on the block, senior government officials said today.
In April, disinvestment minister Arun Shourie had lobbied for a bar on PSUs bidding for other state-owned entities because it negated the very principle of the selloff process: that the government should withdraw from non-strategic, non-core areas of business.
Shourie’s strong pitch for such a ban on PSU bids came soon after Indian Oil Corporation snapped up IBP with an unmatchable bid of over Rs 1,153.68 crore in April.
A compromise formula on the contentious issue of divestment was hammered out at Thursday’s informal meeting chaired by Prime Minister Atal Bihari Vajpayee where both Shourie and defence minister George Fernandes had to climb down from their hardline positions.
It is now learnt that finance minister Jaswant Singh played a key role in micro-managing the details of the consensus formula which Shourie is scheduled to announce in Parliament on Monday.
In another development, the Vajpayee government is incensed over the fact that the Union Cabinet’s decision on September 7 to put a three-month freeze on the issue of divestment till the bickering within the ministry was resolved had somehow leaked to players in the stock market who had made a killing with a bear market operation.
The stocks of public sector companies, especially Hindustan Petroleum Corporation and Bharat Petroleum Corporation, had tanked on the news, giving a couple of market players who had prior information of the three-month freeze on disinvestment the opportunity to rake in the moolah.
Under the compromise formula that has now been reached, the government will sell a part of its stake in HPCL to a strategic investor, who will control the management. There are several suitors for HPCL including Shell, British Petroleum and Reliance. Exxon is also believed to be interested.
There is a possibility that ONGC could seek special dispensation to bid for HPCL because it is keen to build its own retail network after picking up 26 per cent stake in Mangalore Refineries and Petrochemicals Ltd (MPRPL) from the AV Birla group.
One of the proposals that has been bandied about is that ONGC could form a bidding consortium with Shell or British Petroleum. A meeting of the Cabinet Committee on Disinvestment is scheduled next week where all these are likely to be discussed.