Indian cabinet approves sale of state-run oil majors

Monday, 27 January 2003, 08:00 Hrs
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The Indian cabinet Sunday approved the much-awaited divestment of the government's stake in two blue-chip oil firms that had been halted due to political squabbling.

NEW DELHI: The government would sell 34.01 percent in Hindustan Petroleum Corporation Ltd. (HPCL) to a strategic partner and make a public offering of 35.2 percent in Bharat Petroleum Corporation Ltd. (BPCL) in domestic and international markets, said Disinvestment Minister Arun Shourie.

The government would not allow any public sector company to bid for picking up its equity in HPCL, Shourie told a press conference after a meeting of the Cabinet Committee on Disinvestment (CCD).

The government has decided to sell five percent each to the employees of the two firms.

The minister didn't set a timeframe for completing the privatisation process of the two firms, saying the government would like to finish the exercise "as soon as possible".

The government had postponed the sell-off process of the two oil giants, which together control 40 percent of India's two million barrel-a-day oil market, in September in the face of intense political squabbling.

It found common ground on its stalled privatisation programme two days before the end of three-month moratorium in December.

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 the three-month delay.

India's privatisation drive, projected as the cornerstone of its reforms programme, has repeatedly come under attack in recent months, with the ruling coalition's allies demanding a review of the divestment agenda.

The government raised 48 billion from 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 telecom giant Videsh Sanchar Nigam Ltd. (VSNL), oil firm IBP and the country's largest joint venture carmaker Maruti Udyog Ltd. this year.

Source: IANS

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