The Hindu Business Line : Cabinet committee meet on HPCL, BPCL sell-off today

THE Cabinet Committee on Disinvestment (CCD) is expected to meet on Wednesday to consider proposals for privatisation of Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) through the strategic sale route.

The meeting will also finalise the strategic partner for the ailing Jessop & Company, a subsidiary of Bharat Bhari Udyog Nigam Ltd.

Government sources said that Ruia Cotex, a Ruia group company, promoted by Mr Pawan Kumar Ruia, had submitted the highest bid for acquiring a controlling stake of 72 per cent in the Kolkata-based heavy engineering company.

The CCD will also consider the key changes proposed by the Ministry of Disinvestment in the transaction documents for the strategic sale of Hindustan Zinc.

The changes relate to providing full indemnity to the bidders against losses arising out of environment problems, compressing the lock-in period for sale of equity from five to three years and allowing the bidders to mortgage the equity purchased from the Government with banks and financial institutions for the purpose of raising funds.

In the case of HPCL and BPCL, the Ministry of Disinvestment will be seeking an "in-principle'' approval from the CCD for the privatisation of these companies through strategic sale.

As per the proposals recommended by the Core Group of Secretaries on Disinvestment at a meeting held on February 22, the Government plans to reduce its holding in both HPCL and BPCL to 26 per cent from the existing level.

Once the Cabinet approval is obtained, the Disinvestment Ministry will kick off the process of privatising these companies by appointing global advisors.

While considering the proposals, the CCD will also discuss the issue of creation of monopolies during disinvestment in HPCL, BPCL and IPCL.

In this context, the CCD will discuss a letter written by the IOC Chairman, Mr M. A. Pathan, urging the Government to lift the ban imposed on IOC from participating in the privatisation of HPCL and BPCL.

If the Government wanted to go ahead with its plan of banning IOC, then it should apply the same monopoly logic to exclude Reliance from bidding for IPCL, Mr Pathan had said.

The Ministry of Disinvestment had all along maintained that creation of monopolies in the manufacturing sector could be countered by playing around with the duty structure since most of these products are on OGL (open general licence) and can be imported freely without any restrictions.

The meeting was also likely to discuss whether other national oil companies such as ONGC and GAIL should be allowed to bid for HPCL and BPCL, the sources said.

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