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PM brokered truce over oil PSU selloff

Shahid K Abbas in New Delhi

Prime Minister Atal Bihari Vajpayee managed to broker a temporary truce between the opponents and supporters of the divestment of government stake in Hindustan Petroleum and Bharat Petroleum on Saturday.

Vajpayee's intervention led to the two sides agreeing to the postponement of strategic sale in the two oil PSUs by three months.

Recent differences within the coalition government at the Centre had threatened to derail India's privatisation drive.

Sources said the Cabinet Committee on Divestment's nod for the deferment is a mere formality now. The CCD is slated to meet at the prime minister's residence later on Saturday evening.

However, the postponement of the HPCL, BPCL divestment is being seen as a fragile agreement hammered out in the face of stiff opposition from Defence Minister George Fernandes, Petroleum Minister Ram Naik Coal and Mines Minister Uma Bharati, Civil Aviation Minister Shanawaz Husain, the Rashtriya Swayamsevak Sangh and the Swadeshi Jagaran Manch.

Saturday morning's meeting, convened by the prime minister, lasted for two-and-a-half hours and was attended by Deputy Prime Minister L K Advani, Defence Minister George Fernandes, Petroleum and Natural Gas Minister Ram Naik, Finance Minister Jaswant Singh and Divestment Minister Arun Shourie.

Fernandes, a veteran Socialist, who fired the first salvo, when he wrote to the prime minister last Sunday seeking a review of the government's divestment policy to guard against 'rich getting richer' and prevent private monopolies from spawning, found his flock of supporters swelling as promptly Bharati, Husain, SJM and the RSS joined his bandwagon forcing Advani to take up the matter with Shourie in order to elicit some middle path.

Fernandes, who favoured offloading government equity to retail investors as per the general practice majority of the countries, had in his letter also questioned the current model of stake sale to a strategic partner.

Largely, the other ministers, whose discontent stemmed from the fear that the initial public offer route would bring down the state's holding to less than 51 per cent, apprehend that the sale of the oil PSUs would engender monopolies of the big business.

Ironically, Fernandes, as the industry minister of the Janata Party government in the late seventies, was instrumental in showing the door to international soft drink giants Coca-Cola and the multinational IBM.

The basis of Fernandes' argument is that complete privatisation of the strategic sectors like the oil could threaten nation's oil security as it happened during the 1971 war when the private oil sector refused to cooperate with the government.

Taking exception to divestment ministry's move to bar all PSUs from participating in the divestment process, Fernandes is understood to have sought equal opportunity for both private and public sector companies to bid for buying government stake.

The government can realise maximum value for its investment when there are multiple competitions. Narrowing the process to strategic sale only to private sector while keeping away PSUs and retail investors may not bring maximum realisation, he is believed to have written to the prime minister.

The CCD, which was rescheduled for Saturday after being earlier slated for August 29 following the desire expressed by some ministers, who were abroad, to be present in the meeting, was slated to discuss, a recommendation by a core group of secretaries that no public sector unit should be allowed to bid for other PSUs during the divestment process.

The CCD was also to look into a calendar prepared by the divestment ministry regarding the sale of 15-20 companies on the government's privatisation list.

"We will prepare a calendar that would list the major milestones that should be achieved so that greater accountability can be brought in," Shourie had claimed.

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