With the Left allies taking a tough stand over the nuclear deal, petroleum minister Murali Deora has withdrawn a proposal to sell shares held by a state-run oil company to a multinational firm for fear that it could unnerve his government’s key supporters who oppose disinvestment. At a Cabinet meeting on October 11, Deora withdrew his ministry’s proposal to sell the 49 percent shares held by Bharat Petroleum (BPCL) in lubricant joint venture Bharat Shell Ltd to the dominant 51 percent partner Shell Overseas Investments. No reason was given in the proceedings of the meeting but sources said Deora developed cold feet after being told that the joint venture had been earning profits in the last three years. The Left is opposed to disinvestment of government shares in profitable public sector undertakings (which BSL is not), but Deora did not want to take chances, they said. Ministry officials declined to comment, saying they were yet to receive the minutes of the Cabinet meeting. Bharat Shell incurred losses until 2001-02, but after hiving off its loss-making LPG business, it started posting profits. Interestingly, the proposal had the approval of all the ministries that were consulted, including the Finance Ministry. The general consensus was that since BPCL had started marketing its own brand of lubricants, it was unethical for it to continue in a joint venture whose product it was competing against. BPCL had agreed to exit the joint venture — floated in 1993 to market Shell-branded lubricants in India — as it had developed similar products. Besides paying BPCL Rs 145.8 crore in cash, Shell was willing to take over BPCL’s debt burden amounting to Rs 31.2 crore as on March 2006.
