New Delhi, Jan. 27: The Congress and the CPM are likely to bring in motions in the budget session of Parliament, disapproving the Centre’s decision to sell its stake in Hindustan Petroleum Corporation Limited (HPCL) to a strategic investor even as oil sector trade unions have threatened to launch a nationwide strike to protest the controversial move.
The Centre will table a gazette notification seeking to disinvest, in strategic sale, 34.1 per cent stake in the oil retailing company. The notification will have to be considered within 30 working days of being tabled.
A major sticking point in the contentious debate over the sell-off of HPCL and Bharat Petroleum Corporation Limited (BPCL) was resolved when the Centre decided that no state-run company, including ONGC and cooperative sector companies, would be permitted to bid for HPCL.
Although the Opposition cannot overturn the BJP-led Cabinet’s decision yesterday to sell its stake in HPCL to a strategic partner and offload another 35.2 per cent in BPCL through a public issue of shares, it can delay the process through motions disapproving the notification.
If the disapproval motion is cleared by both Houses, the sale can be stopped. But the BJP-led NDA controls a majority in the Lok Sabha.
In two separate and strongly-worded statements today, the Congress and the CPM attacked the Centre’s decision, made at a meeting of the Cabinet Committee on Disinvestment, to sell its stake in the two oil majors.
“The Congress has consistently and strongly opposed withdrawal of the state from the strategic sector, of which hydrocarbon is a vital part. This position was clearly articulated... at the party’s plenary session in Bangalore,” Congress spokesman S. Jaipal Reddy said here.
In an apparent reference to the war clouds hovering over Iraq, he said such a step should not be taken in a strategic sector “when there is so much uncertainty in the world”.
“The Vajpayee government’s decision to sell public assets in such a vital sector is nothing but a betrayal of the country’s interest,” the Congress statement said. “The government’s decision not to allow public sector units like ONGC to bid for HPCL makes it clear the Centre is determined to foster private monopolies, both foreign and Indian, in the strategic sector.”
Yesterday’s Cabinet committee meeting also decided to offload 5 per cent of HPCL equity to its employees while the government retained 12 per cent.
The meeting decided to sell 35.2 per cent of BPCL equity through a combination of an Indian public offer and issue of depository shares in the global market. Company employees will get 5 per cent of the equity and the government will retain 26 per cent.
The Centre’s decision followed attorney-general Soli Sorabjee’s advice that there was no need to repeal the Acts of Parliament under which both companies were taken over by the government in the 1970s.
Sorabjee said the Centre could instead table a gazette notification in both Houses of Parliament. Sorabjee’s advice was sought after the Congress said the selloff could not proceed until the Acts were repealed.
To make the HPCL sale offer more attractive, the Centre decided to waive a caveat that a bidder should invest or provide a bank guarantee of Rs 2,000 crore. This is the minimum investment required under petroleum ministry regulations to allow a company to market petroleum products after acquiring HPCL. The Centre had insisted on a similar condition when it sold IBP.
If the new management of HPCL is not keen on setting up a refinery in Bhatinda, Punjab, that is estimated to cost Rs 10,000 crore, the Centre could take up the job through a state-run oil major. According to analysts, all the three decisions taken together favours the private-sector giants which are keen to bid for HPCL, such as Reliance, Essar and Shell.
At yesterday’s meeting, however, petroleum minister Ram Naik, a bitter opponent of the selloff, insisted the decisions should not lead to a repetition of either the 1971 war scenario or the Juhu Centaur case.
In 1971, Esso (the pre-nationalisation name of HPCL) had refused to comply with Central directives on stockpiling oil and transporting them to army depots. As for Juhu Centaur, it changed hands at a considerably higher price within weeks of being sold by the Centre.
Naik’s opposition led to a number of safety riders being inserted into the sale pact. The Centre will now have to sign a memorandum of understanding with the new owners of HPCL that will bar the new management from taking any action against public interest or policy without the Centre’s prior permission.
This implicitly means the company will have to accept all Central directions to it made in public interest, especially in times of an emergency such as a war or an international crisis such as a US-Iraq conflict.
The MoU will also debar the new HPCL management from changing its articles of association or the share capital structure without the Centre’s prior permission.