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Privatisation of Indian oil firms runs into legal hurdles
Monday, 01 September 2003, 19:30 IST
NEW DELHI: The privatisation of India's state-run oil firms, Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL), is likely to get further delayed with the process running into legal hurdles.
While workers of the two firms are continuing with their protests against a reduction in the government's stake, the latest blow to the divestment process has come from the Comptroller and Auditor General's (CAG's) office.
The auditor has reportedly pointed out that the oil companies owe money to the government and those dues should have been settled before HPCL and BPCL were put on the block earlier this year.
The government is already engaged in a legal battle with HPCL workers on the issue of privatisation of HPCL, India's second-largest oil refiner and retailer.
"We will be able to comment on the course of HPCL and BPCL privatisation only after the Supreme Court verdict," said a disinvestment ministry official. He refused to give further details.
The Supreme Court said Monday that it would hear the case Friday. On July 25, the court had asked the government to respond to a notice challenging the privatisation of HPCL, which has a countrywide network of petrol stations.
The Oil Sector Officers' Association has challenged the decision to divest state's equity in HPCL, saying a company nationalised by Parliament can only be privatised with the approval of Parliament.
Attorney General Soli Sorabjee had earlier said that no parliamentary approval was needed for the sale of HPCL. Petroleum Minister Ram Naik had sought deferment of HPCL divestment till the court heard the workers' union petition.
Analyst say the whole process of HPCL privatisation was likely to be delayed in the face of the legal hurdles and workers' protests, badly hitting its valuation in the market.
"Every day there is a new issue cropping up about the sale of HPCL and BPCL. This definitely creates a lot of confusion in the mind of investors," said Neeraj Deewan, a senior analyst with New Delhi-based Quantum Securities.
"These developments will also have a negative impact on their share prices that had soared in the past on hopes of speedy privatisation."
HPCL workers last week prevented an official of Reliance Industries, which has submitted its bid for picking up the government's stake, from entering the company's refinery premises near Mumbai to conduct due diligence exercise.
In March, about 30,000 non-management workers of BPCL and HPCL held a nationwide one-day strike to protest government plans to reduce equity in the firms.
Besides Reliance Industries, several multinational oil firms including Royal Dutch Shell, Saudi Aramco, BP and Malaysia's Petronas have showed interest in the company.
The government is selling 35.2 percent equity in BPCL through public offer in domestic and international markets and 34.01 percent equity shares of HPCL to a strategic buyer.
The government had postponed the sell-off process of HPCL and BPCL for three months in September last year in the face of intense political squabbling. HPCL and BPCL control 40 percent of India's two million barrel-a-day oil market.
Source: IANS
Source: IANS