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IPCL divestment: Govt to revert to original plan

P. Manoj

NEW DELHI, Sept. 17

THE Union Government is set to revert to its original plan for the sale of its 25 per cent equity in Indian Petrochemicals Corporation Ltd (IPCL) to a strategic buyer.

The Ministry of Disinvestment (MoD) is looking at continuing with the sale of 25 per cent of the Government's equity in IPCL as a whole with the two bidders left in the fray -- Reliance Industries Ltd and IOC-Soros-Chatterjee combine -- when the plan was altered by the Cabinet Committee on Disinvestment (CCD) late last year, a top Ministry official told Business Line.

The move to go back to the original proposal for disinvestment in IPCL comes in the wake of an unsuccessful attempt by a disputes committee headed by the Cabinet Secretary to resolve the differences between IPCL and IOC over the valuation of the former's Vadodara plant which was to be transferred to IOC.

The CCD had decided last year to alter the IPCL divestment plan by hiving off its Vadodara Plant into a separate entity and transferred to IOC after proper valuation of assets. The CCD had also decided to retain the 25 per cent strategic sale plan for th e remaining two units of IPCL at Nagothane and Gandhar.

However, even after a year, both IPCL and IOC have not been able to sort out the differences in valuation for transferring the Vadodara plant to IOC. While IPCL interpreted the transfer as an asset sale and pegged a higher price for its Vadodara plant, I OC clearly stated its willingness to take over the plant only if it was offered at a reasonable price minus all liabilities.

``The differences between the two sides on valuing the Vadodara plant persists. Even the Disputes Committee headed by the Cabinet Secretary has not been able to resolve the matter. We will report the matter to the CCD with a proposal to go back to the or iginal proposal,'' the MoD official said.

The MoD is likely to take the process forward with the RIL and IOC-Soros-Chatterjee bid in the face of apprehensions that a fresh round of bidding for the sale of 25 per cent of the Government's equity in IPCL may not enthuse anybody at all besides consu ming further time.

``We are looking at resuming the process with the remaining two bidders in the fray, when the original proposal for divestment in IPCL was altered late last year by the CCD,'' the official stated.

The demerger of the Vadodara plant was considered to be a value enhancer for the remaining two plants of IPCL due to bloated staff and older equipment and machinery at Vadodara.