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Journalism of Courage
JULY 19: In a significant move, the petroleum ministry has finally backed down from its earlier stand of conferring strategic status to the entire oil sector. It has now agreed to consider disinvestment in the 13 public sector oil companies on a case-to-case basis.
A consensus on this ongoing contentious issue was arrived at between the petroleum ministry and the department of disinvestment at Wednesday8217;s meeting of the Cabinet Committee on Disinvestment CCD.
Top Government sources told The Indian Express that the DoD and petroleum ministry have agreed that the strategic sector status will be allotted only to Railways, Atomic Energy and Defence sectors and that the entire oil sector could not be included in this list.
quot;It has been decided that disinvestment in each oil PSU will be looked into separately and that the petroleum ministry will no more insist on retaining government8217;s equity in all oil PSUs at 51 per cent, except in the three flagship oil companies8211;IOC, ONGC and GAILquot;, a top Government official said.
The DoD in the last CCD meeting had agreed on according strategic status to these three oil companies. At Wednesday8217;s CCD meeting, it was decided that each oil company8217;s case would be taken up separately and any decision over their disinvestment will be taken by DoD in consultation with the petroleum ministry.
It has also been decided that before taking a final view on disinvestment in IBP, the petroleum ministry and the DoD will have detailed discussions on various problem areas such as the ones related with the employees, who will be directly affected by such a restructuring exercise and also the various subsidiaries of IBP.
A cabinet note on disinvestment in IBP will be brought out after soliciting the views of the petroleum ministry. A formal meeting between DoD and petroleum officials will be called shortly to discuss these issues.
On being contacted, the petroleum minister, Ram Naik refused to comment on the proceedings of the CCD meeting.
Earlier, Naik had demanded strategic status for the entire oil sector saying that government equity in oil companies including IBP should not be brought down below 51 per cent. Naik felt that the oil sector enjoyed the same importance as Defence or Railways and should therefore be accorded strategic status.
Sources say that the petroleum ministry is unlikley to pay much attention to stand alone refineries including Madras Refineries Limited MRL, Cochin Refineries Limited CRL and Bongaigaon Refinery and Petrochemical Limited BRPL-as they have been proposed for sale to Indian Oil and Bharat Petroleum Corporation Limited BPCL.
Interestingly, even within the ministry there are different views over the sale of these companies as some feel that the process should be through the open bidding route. The ministry will take abundant caution while taking a view over disinvestment in HPCL and BPCL as both are cash rich PSUs with strong retail network of over 4000 outlets each.
Shell of Netherlands has apparaently made it known that it is keen on acquiring BPCL while Exxon-Mobil has been eyeing HPCL. French oil major, Total has already indicated that it is ready to buy out one of these two navaratnas.
The petroleum ministry will need to draft out short term plans for BPCL and HPCL till the onset of deregulation in 2002. As regards Engineers India Limited EIL, the latest rumour doing the rounds is that IOC is keen on acquiring 26 per cent stake in the company.
