The Telegraph
Since 1st March, 1999
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Legal delay in petroleum divestment

New Delhi, Dec. 27: The Centre today put off a decision on the controversial selloff of the two state-run oil companies — Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) — as the attorney-general was yet to give his opinion on certain legal aspects which had been raised in Parliament.

The Congress and other Opposition parties had tried to create a legislative gridlock in the selloff by arguing that divestment had to be preceded by the repeal of the Act under which the two PSUs were taken over by the Centre in the 1970s.

It was then agreed that the attorney-general’s views would be sought before deciding on the modalities for the selloff.

The Cabinet Committee on Divestment (CCD) — that met today for the first time since the three-month freeze on selloff plans was decided at the September 7 meeting — has, however, decided to call for fresh bids for three public sector fertiliser companies: National Fertiliser Ltd (NFL), Madras Fertiliser, and Fertilisers and Chemical Travancore.

The committee also decided to allow cooperatives such as Iffco and Kribhco to participate in the disinvestment process.

Announcing the Centre’s decision, disinvestment minister Arun Shourie said: “We deferred HPCL and BPCL (divestment) at today’s meeting because the attorney-general’s opinion could not be obtained.”

Senior ministry officials said a decision was deferred on the proposal mooted by the disinvestment ministry to off-load 34 per cent in HPCL to a strategic investor and 38.2 per cent in BPCL.

Shourie added: “The A-G’s opinion was needed on whether the government should go back to Parliament for clearance on disinvestment in the two oil PSUs, which were acquired by the government in the 1970s.”

“We did not discuss any other aspects of disinvestment in the two oil PSUs. No time-frame has been set for it,” he said, adding that the process would start only after the attorney-general gave his opinion.

The attorney-general, he said, has set no time-frame to give his opinion.

Clarifying the Centre’s decision, Pradeep Baijal, secretary in the disinvestment ministry, said: “We will seek fresh bids in the three fertiliser PSUs. For NFL, we decided to call for fresh bids as the corporation was benefited by Rs 210 crore after announcement of the new fertiliser policy and 7th and 8th pricing formulae.”

On the Centre’s decision to put Centaur and Chefair hotels on the block, Shourie said: “There would be no restriction on its sale or resale but a clause will be inserted ensuring that the property is used only as a hotel after its privatisation.”

As the Centre has already proposed that the international airport at Delhi be converted into a joint-venture airport, Shourie said no bids would be invited till a decision on this matter was announced.

The CCD also decided to sell Balmer Lawrie as a combined entity on as-is-where-is basis and the financial bids would be called soon. Seven likely bidders have been shortlisted, Shourie said.

The CCD rejected an only bid for newsprint company NEPA and decided to start the process afresh.

For Central Inland Water Transport Corporation, the Centre would soon commence the process of disinvestment after due consultation with the shipping ministry on modalities relating to timing.

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