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CCD meeting on Sunday

By Our Special Correspondent

NEW DELHI JAN. 24. With key members including the Prime Minister likely to be busy after next week, it has been decided to take the unusual step of holding a meeting of the Cabinet Committee on Disinvestment (CCD) on Republic Day. The meeting is slated to discuss the long-pending controversy-ridden issue of disinvesting Hindustan Petroleum Corporation Limited (HPCL) and Bharat Petroleum Corporation Limited (BPCL).

Decks have been cleared for the disinvestment following the opinion given by the Attorney-General, Soli Sorabjee, ruling out the need to withdraw the previous nationalisation laws relating to these companies. He has concurred with the Disinvestment Ministry's stance that these companies should be dealt with under the provisions of Company Law like other nationalised companies which have been privatised such as Maruti Udyog Limited.

Though the companies were taken over under specific nationalisation legislation, the AG agreed that such companies could be privatised under the Companies Act and that there would be no need to revert to Parliament to revoke the previous legislation.

Official sources here say the CCD meeting will be held immediately after the President's usual Republic Day reception in the afternoon. The CCD is expected to consider sale of government equity in HPCL to a strategic buyer while recommending that BPCL opt for divesting through an initial public offer in both the domestic and overseas market.

One of the reasons for the urgency in holding the CCD is the need for the Government to raise more resources to bridge the fiscal deficit. The effort is evidently to ensure that disinvestment of these two profit-making oil sector companies takes place within the current fiscal so that revenue mobilisation can be taken credit for in the budget at the end of February.

In case the CCD meeting had been pushed to March, it would not have been possible to raise more resources for disinvestment during 2002-3 for which the disinvestment revenue target has been set at Rs. 12,000 crores.

Till now, an estimated Rs. 3,500 crores has been raised through disinvestment in the current financial year.

This is far lower than the target, but the figure can be made more respectable if the HPCL sale is carried out during February. BPCL may be more difficult since the timing of the IPO both here and abroad would depend on market conditions being suitable for the issue.

At the last meeting of the CCD held on December 27, the proposal for disinvesting HPCL and BPCL was deferred pending the AG's opinion on the legal issues related to nationalisation.

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