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Clouds seen lifting over India's gasping privatisation drive
Friday, 06 December 2002, 20:30 IST
NEW DELHI: The Indian government's sputtering privatisation programme is expected to pick up steam with ministers reaching a consensus on resuming the divestment process of two state-run oil majors.
Analysts say the end of gridlock over the privatisation of Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd. (BPCL) is bound to restore investor confidence in New Delhi's ambitious economic reforms process.
"The end of deadlock over the sale of two oil firms is definitely a positive step forward," said T.K. Bhaumik, a senior economist with the Confederation of Indian Industry (CII), one of the country's leading industry lobby groups.
"It sends out a very clear message that the government was making a sincere effort to move ahead along the reforms path by building a consensus. I think it will clear doubts from investor minds about the reforms," Bhaumik told IANS.
Disinvestment Minister Arun Shourie said late Thursday that the government had found common ground on its stalled privatisation programme.
The announcement came two days before the deadline to decide the stake sales of HPCL and BPCL. The government was forced to postpone the sell-off process of two oil giants for three months in September due to intense political squabbling.
"We have reached a unanimous view on disinvestment," Shourie said after a meeting of top ministers, chaired by Prime Minister Atal Behari Vajpayee.
The minister, however, refused to details, saying the prime minister had asked him to make a statement in Parliament.
The government reportedly has decided to sell a part of its stake in HPCL to domestic and overseas companies and sell shares of BPCL to local investors.
Reacting to the news, shares of HPCL and BPCL, which together control 40 percent of India's two million barrel-a-day oil market, soared as much as 20 percent in early trade on the Bombay Stock Exchange Friday.
The market value of HPCL and BPCL shares had dropped over 30 percent in September after Petroleum Minister Ram Naik and Defence Minister George Fernandes forced through a three-month delay on selling stakes.
Many had said the failure to put the privatisation programme on fast track reflected Vajpayee's failure to force the multi-party National Democratic Alliance in power to push through change.
"At a time when some of the coalition partners were trying to halt the exercise, a decision on the sell-off of HPCL and BPCL is a very positive indication," said D.K. Srivastava of the National Institute of Public Finance and Policy.
India's privatisation drive, projected as the cornerstone of the reforms programme, has repeatedly come under attacks in recent months, with the ruling coalition's allies demanding review of the divestment agenda.
"Though the actual sell-off process of the two oil firms may take time to start, the decision taken at yesterday's meeting signals that the process of selling government stake in public sector units would not be reversed," said Srivastava.
The government said Tuesday that the privatisation drive was an integral part of the country's economic reforms process though receipts from these were sharply lower than estimated.
"Disinvestment is an integral part of the reform process," said a mid-year economic review report presented in Parliament by the finance ministry.
"Disinvestment has proceeded by building up a political consensus across a wide spectrum of opinion," said the report, which indicates the government policies that are likely to be announced in the annual budget for 2003-04.
The government raised 
48 billion selling state-run companies in April to October this year, less than half of the 120-billion target set for the year to March 2003.
The government ignored criticism and sold its stake in the telecom giant Videsh Sanchar Nigam Ltd (VSNL), oil firm IBP and the country's largest joint venture carmaker Maruti Udyog Ltd this year.
Bhaumik of CII hoped a solution to the stalled asset sale of the two oil companies would "queer the pitch" for finding common ground on stalled divestment process in other blue-chip public sector units such as National Aluminum Company Ltd.
The due diligence for National Aluminum Company has been stopped after workers didn't allow prospective buyers to inspect the smelter of India's biggest alumina producer.
Source: IANS
48 billion selling state-run companies in April to October this year, less than half of the 120-billion target set for the year to March 2003.
The government ignored criticism and sold its stake in the telecom giant Videsh Sanchar Nigam Ltd (VSNL), oil firm IBP and the country's largest joint venture carmaker Maruti Udyog Ltd this year.
Bhaumik of CII hoped a solution to the stalled asset sale of the two oil companies would "queer the pitch" for finding common ground on stalled divestment process in other blue-chip public sector units such as National Aluminum Company Ltd.
The due diligence for National Aluminum Company has been stopped after workers didn't allow prospective buyers to inspect the smelter of India's biggest alumina producer.
Source: IANS