The Hindu : Disinvestment of oil sector put off by three months

Online edition of India's National Newspaper
Sunday, Sep 08, 2002

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Disinvestment of oil sector put off by three months

By Sushma Ramachandran

NEW DELHI SEPT. 7. The Cabinet Committee on Disinvestment (CCD) tonight decided to defer the controversial privatisation plans for the Hindustan Petroleum Corporation Limited (HPCL) and the Bharat Petroleum Corporation Limited (BPCL) for three months, paving the way for a probable review of the Government's disinvestment policy.

The CCD's decision was an endorsement of the deferment proposal made at an informal meeting presided over by the Prime Minister, Atal Behari Vajpayee, earlier in the day with various warring factions in the battle over oil sector disinvestment. Apart from the HPCL and the BPCL, it has also been decided to keep divestment of government equity stake in the Indian Oil Corporation, the Gas Authority of India Limited, the Oil and Natural Gas Corporation and the National Thermal Power Corporation in abeyance. Sources here indicated that the three-month hiatus in decision-making on the oil sector could ultimately lead to a mid-term review of the disinvestment policy as has been sought by the Defence Minister, George Fernandes. With a large segment of the Cabinet as well as the RSS and even Opposition parties opposed to the policy of strategic sales, especially in the case of cash-rich profit making companies, it appears that the disinvestment process may ultimately grind to a halt.

These sources say the decision on deferment was basically on the grounds that these were efficient profit-making companies and the general feeling was that there was no need for any hurry to privatise them. The security issue was raised but evidently was not paramount since oil sector is technically not notified as a strategic industry.

In any case, the Disinvestment Minister, Arun Shourie, conceded after the CCD meeting that the budgetary target for revenue mobilisation through disinvestment is not likely to be achieved as a result of today's decision. In addition, it would not be possible to meet the time-frame for disinvestment of various companies for which a road-map had earlier this year been cleared by the CCD.

Briefing newspersons in the evening, he said the CCD was also attended by Mr. Fernandes and the Human Resource Development Minister, Murli Manohar Joshi. Mr. Shourie merely smiled when asked whether the Ministers opposed to disinvestment would regularly be invited for the CCD meetings. Though he was his usual polite self at the press conference, he had earlier in the day snapped at reporters seeking a briefing about the informal meeting convened by the Prime Minister.

Mr. Shourie who has been able to carry out strategic sales despite considerable controversy in a large number of major public sector companies like the Bharat Aluminium Corporation Limited, appears to have hit a roadblock. Though he insisted that the process of disinvestment in other companies would continue as in the case of the Shipping Corporation of India, the National Fertilisers Limited and the National Aluminium Corporation, it is clear that the vocal protests by the administrative ministries concerned have had their impact.

The informal meeting convened earlier in the day by the Prime Minister to resolve the contentious debate over the HPCL and the BPCL sale was attended by the Deputy Prime Minister, L.K. Advani, the Finance Minister, Jaswant Singh, the Petroleum Minister, Ram Naik, Mr. Joshi, Mr. Fernandes and Mr. Shourie.

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