Petroleum ministry asked to prepare white paper

Speaking to The Indian Express, a senior government official said that sale of government’s equity in IBP will be a good start for testing market response. This can be set as an example for future disinvestment of government’s equity in other oil companies, he said.

There was, however, no discussion on the petroleum minister’s long standing demand of conferring `strategic status’ on the oil sector. CCD has decided to deal separately with this issue.

The restructuring of the stand-alone refineries will include mergers and alliances with the objective of increasing shareholders value. It has been proposed that MRL and BRPL be merged with IOC, and CRL be merged with Bharat Petroleum besides selling IBP’s stake in Numaligarh to BPC.

Sources said that differences of opinion surfaced over the issue of sale of government’s shares in petroleum companies during the CCD meeting. The petroleum ministry did not agree to the disinvestment department’s insistence on bringing down the government stake in petroleum companies to below 51 per cent.

As per sources, Naik said that the restructuring exercise alone would help the government garner substantial funds. Therefore, department of disinvestment should not stress over the dilution of government’s equity below 51 per cent in major oil PSUs.

CCD accepted the plea of petroleum minister Ram Naik to defer any disinvestment in oil PSUs till the time restructuring of stand-alone refineries is undertaken, he added.

"Disinvestment in other oil companies such as HPCL, BPCL and IOC would be considered once the restructuring has been carried out in the four stand-alone refineries. Even a 10 per cent disinvestment in IOC, will be considered once the restructuring exercise is over. If the market conditions are conducive, the disinvestment of a 10 per cent government’s stake in IOC will be done during the current fiscal", the official added.

The Disinvestment Commission has suggested sale of 33.9 per cent of the IBP’s equity out of the government’s holding of 59 per cent. Moreover, in accordance with Sebi’s takeover code, the strategic buyer has to acquire shares from the public also.

The exact modus operandi to be followed by the government for disinvesting its shares in IBP will be listed in the cabinet note, to be put up in the next meeting of the CCD, sources added.