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Reservations remain over disinvestment

By Sushma Ramachandran

NEW DELHI Dec. 6. The public sector disinvestment process appears to have resumed for the time being with a compromise formula believed to have been hammered out for the Hindustan Petroleum Corporation Limited (HPCL) and the Bharat Petroleum Corporation Limited (BPCL). Reservations over the modalities of disinvestment, however, are not expected to completely die down as there remains considerable opposition to the disinvestment of profit-making public sector units like the National Aluminium Corporation Limited (NALCO).

Even in the oil sector, the controversial issue of strategic sale of HPCL and BPCL has been resolved by a compromise which apparently envisages that only one company is offered for bidding. HPCL, which was originally taken over from Caltex and nationalised about 30 years ago is expected to be put up for strategic sale, while the BPCL, which was the erstwhile Burmah Shell Company, will be retained under government control.

The Petroleum Minister Ram Naik had urged that both HPCL and BPCL be allowed to go ahead with IPOs and raise resources for expansion before being privatised, but his plea has been upheld only in the case of BPCL.

Though the compromise was evidently reached at the informal meeting of the Cabinet Committee on Disinvestment (CCD) on Wednesday, there continues to be vociferous opposition to the disinvestment process within the Bhartiya Janata Party as well as its allies. The next major case likely to be taken up is NALCO, which has already prompted dharnas and agitations in Bhubaneshwar as well as manhandling of teams from companies involved in the bidding. The Disinvestment Ministry has blandly been maintaining that it will be continuing the process in the absence of any directives to the contrary, despite the fact that the Coal and Mines Minister, Uma Bharti, has publicly voiced her objections to the NALCO sale.

Simultaneously, the controversy over the re-sale of Centaur Hotel by the original buyer, A.L. Batra, continues to rage with the Shiv Sena MP, Sanjay Nirupam, alleging graft in the deal. The issue has been referred to the Law Ministry for a view but indications are that future deals will include a clause precluding re-sale for a specified period of time. This is largely because even the Disinvestment Ministry appeared to have been amazed by the rapid resale, though Mr. Batra has denied that the profit is much since he had to add various interest and debt liability to the re-sale prices.

In this backdrop, it seems that public sector disinvestment is not likely to be smooth sailing even though Wednesday's meeting, presided over by the Prime Minister, Atal Behari Vajpayee, succeeded in resolving the contentious issues relating to HPCL and BPCL.

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