The government will set in motion the process for a public float of 35 per cent of its equity in Bharat Petroleum Corporation Ltd this week.
The inter-ministerial group is slated to meet on Thursday to chalk out the exact modalities and timing of the issue.
The Cabinet Committee on Divestment had, on January 26, decided to offer 35.2 per cent equity in domestic and international markets along with 5 per cent to company employees at a concessional price based on the Videsh Sanchar Nigam Ltd model.
In view of the limited depth of domestic markets, the divestment ministry has proposed to offer only 10 per cent equity in local markets and the rest in international bourses.
The IMG, which comprises joint secretary-level officials from the divestment, petroleum, finance and law ministries, will take a final decision on the timing and exact quantum of equity to be offered in domestic and international markets.
It will also decide on the terms and conditions for appointing a consultant for the public float before the divestment ministry invites presentations from merchant bankers.
Initial bids from merchant bankers had been called last year, but the process would have to be repeated as the scope of work had changed. The earlier bids had been received for advising the government on strategic sale.
In the case of Hindustan Petroleum Corporation Ltd, which is set for strategic sale, the original bids from merchant bankers are still valid and the ministry has invited them to make presentations from February 17.
The ministry has already invited expressions of interest from companies interested in picking up the 34 per cent equity on offer.
According to a divestment ministry calculation, each of the 10,000 odd employees of BPCL stands to gain Rs 160,000 through the concessional shares, while every HPCL employee can get earn over Rs 300,000 by purchasing the equity on offer at one-third the market price.
As per the VSNL scheme, the employees would be entitled to picking up equity at a third of last six months' average market price or the bid price, whichever is lower.
HPCL brass kept in the dark
The growing fissure between the government and the HPCL management has come out in the open with the latter blaming the authorities for keeping it in the dark about the decision to privatise the oil company, reports Pradeep Puri.
The management's ire was on display at a recent meeting convened by Petroleum Secretary B K Chaturvedi to meet the situation arising out of the indefinite strike proposed by the Oil Sector Officers' Association.
No sooner had the secretary suggested that managements should explain the government's divestment policy to the employees' and officers' associations, than HPCL's chairman and managing director M B Lal retorted that it had been kept in the dark about the decision to divest the company.
"The management was neither consulted nor involved in any of the decisions of the government. Since the management is not aware of the terms of divestment, it is not in a position to take questions from trade unions," he said.
The diatribe had its desired effect with Chaturvedi directing the ministry's financial adviser to brief managements of HPCL and BPCL about the terms of divestment of the two oil PSUs "so that the managements could interact with the unions to address the concerns of the striking employees."
Later, if necessary, the employees may meet the minister for petroleum and natural gas to express their grievances".
Outlining the contours of the contingency plans to deal with the proposed strike, Chaturvedi said oil marketing companies should be ready to deal with different scenarios.
First, it is possible that only HPCL employees go on an indefinite strike, while employees of other oil PSUs participate in a token strike.
The other possibility, according to Chaturvedi, is employees of all oil PSUs join the indefinite strike. The secretary said oil firms should be ready to supply petroleum products to HPCL dealers since it was expected that they would not go on strike.
He asked the additional secretary to work out the contingency plan "and review the position once a week. This may be included in the report to be sent to the Cabinet secretary and the Prime Minister's Office. The ministry should address state governments about the precautionary steps to be taken to meet the situation arising out of the proposed strike of oil sector employees".
Chaturvedi also said oil marketing companies should be ready to take legal remedies in consultations with their legal cells under various provisions of the Essential Services Maintenance Act to declare the proposed strike illegal.
