Search the Internet          Tips  Sites: Finance, Investment

Monopoly bar must be uniform: IOC

BS Energy Editor

Indian Oil Corporation, which has been debarred from bidding for government stake in Hindustan Petroleum Corporation and Bharat Petroleum Corporation said on Saturday that the policy of discouraging monopolistic acquisitions should also apply to other PSUs up for sale.

IOC chairman M A Pathan told reporters in New Delhi on Friday, "We respect that policy. But this should also be applicable to other PSUs up for divestment." He was speaking after signing of the share purchase and shareholders' agreement for acquisition of government stake in IBP Company Limited.

Though IOC chairman did not specify the PSUs where the same policy of discouraging monopolistic acquisitions should be applicable, he probably was referring to the sale of 25 per cent equity in Indian Petrochemical Corporation Ltd where IOC is pitted against Reliance Industries Limited, the country's largest petrochemical company. If it was successful in acquiring IPCL, Reliance would control over 80 per cent of the petrochemicals market.

He said the corporation had no intention at any point of time to bid for HPCL and BPCL. "We want competition in market so that consumer gains. Competition brings better prices, quality and services. And this is possible only if other big names enter marketing of petroleum products," he said.

Refuting reports of "pressure" at the time of bidding for IBP, Pathan said a four-member committee of directors decided on the bid price of Rs 1551.25 a share. "The directors analysed what gains the strategic acquisition of IBP could accrue to IOC and bid accordingly."

Pathan said that as per Sebi rules, IOC would make an open offer for acquiring an additional 20 per cent stake in IBP in the next 7-10 days and complete the transaction by June. IOC would have to shell out Rs 6.87 billion for the open offer, he said.

The share purchase and shareholders agreement for acquisition of government's 7,437,053 shares (33.58 per cent) for Rs 11.54 billion was signed by S Vijayraghavan, joint secretary, ministry of petroleum and natural gas, and S Ramachandran, director (planning and business development), IOC.

Pathan said most of the fund requirement of Rs 18.41 billion would be met from internal reserves and accruals while the shortfall would be met through short-term market borrowings.

The IOC chairman said IBP would maintain a separate identity, retaining its own brand-name.

"It will not be merged with IOC and will remain a subsidiary of IOC." IOC sources said S N Mathur would continue to head IBP whose board would be expanded to induct 2-3 directors of IOC.

Powered by

YOU MAY ALSO WANT TO READ:
The Divestment Development
The Rediff-Business Standard Special
Money

Tell us what you think of this report