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Stage set for ITDC, HCI divestment, price bids by November

The government on Tuesday finalised the transaction documents for sale of 13 hotels of India Tourism Development Corporation and Hotel Corporation of India as also the privatisation of Hindutan Zinc Ltd and said price bids for these would be invited by next month.

Draft share-holders and share purchase agreements for eight hotels of ITDC, five properties of HCI and sale of 26 per cent stake in HZL were finalised at the meeting of the Cabinet Committee on Divestment, chaired by Prime Minister Atal Bihari Vajpayee in New Delhi.

He further said the 'progress on divestment in identified PSUs (13) during the current financial year is well on schedule'.

A total of 115 potential bidders, including 97 for ITDC, were identified for the 13 hotels, he said, adding that 'letters for these will start going from tomorrow (Wednesday)'.

In deference to suggestions made by the bidders, the government has decided to spread the price bids for ITDC over eight days and five days for HCI properties, Shourie said elaborating that this would help bidders arrange for bank guarantees and complete other formalities.

While Hotel Ashoka at Delhi and Bangalore would be given on renewable lease for 30 years, other properties of ITDC for which price bids would be invited next month are in Agra, Madurai, Manali, Bodhgaya, Hasan and Mahablaipuram, he said.

All the properties of HCI except that in Srinagar would be divested and the proceeds from these would be ploughed back into Air-India for strengthening India's international flag-carrier.

BANK GUARANTEE CLAUSE FOR IBP WAIVED

Acceding to the requests from bidders, the government on Tuesday waived the condition of Rs 5 billion bank guarantee from the bidders for IBP, but said that the successful bidder would be asked to invest Rs 20 billion in the hydrocarbon sector in ten years.

Divestment Minister Arun Shourie said: "The cabinet committee on divestment has decided to waive the Rs 5 billion bank guarantee proposal from bidders."

He added that the successful bidder would be required to invest Rs 20 billion in ten years in the hydrocarbon sector except retailing activities for which it would have to submit a firm proposal in three years and achieve financial closure in five years.

He said that under the new dispensation, bidders would be asked to invest in a wide range of activities including exploration, refining, pipelines and terminals.

"Investments made for buying government equity in IBP will not be included in the mandatory Rs 20 billion investment," he said.

Several companies including IOC, Reliance, Shell, Totalfina Elf, Essar, HPCL and BPCL are in the race to acquire IBP.

STERLITE

Asked about the government's stand on Sterlite's participation in divestment process after the Securities Appellate Tribunal on Monday struck down market regulator SEBI's order barring the company from accessing capital markets for two years, Shourie said that the guidelines would be applied mechanically on bidders.

"The guidelines are very clear in security and non-security offences and we will apply them mechanically. If they (bidder) get a stay or if any order gets overturned, they will become eligible," he said.

Shourie said the time-table for divestment was being adhered in most of the cases, but added "in case of one or two PSUs such as Bharat Heavy Vessels and Plates & Instrumentation Ltd, bidders have asked for more time."

He, however, pointed out that this would not affect the overall time-table set for completion of divestment of these PSUs saying "we are sure we can adhere to the time table."

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