The Hindu : CCD considers judicial option, disinvestment in IOC

Online edition of India's National Newspaper
Saturday, Oct 04, 2003

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CCD considers judicial option, disinvestment in IOC

The Minister for Disinvestment, IT and Communications, Arun Shourie, on his way to attend a meeting of the Cabinet Committee on Disinvestment in New Delhi on Friday. — Photo: Kamal Narang

New Delhi Oct. 3. The Central Government is considering multiple options to resolve the impasse over disinvestment of the Hindustan Petroleum Corporation Limited and the Bharat Petroleum Corporation Limited following the Supreme Court ruling on the need for prior parliamentary approval.

This includes splitting up and divesting equity of the country's largest oil company, Indian Oil Corporation instead of going ahead with privatisation of the HPCL and the BPCL. The judicial option has also been retained with the likelihood that clarifications will be sought on the judgment to deal with other privatisation cases. Simultaneously, the Union Law Minister, Arun Jaitley, has been directed to examine the possibility of formulating legislation to deal with privatisation of the nationalised companies, along with holding consultations in this regard with other political parties.

Disclosing this here today after a meeting of the Cabinet Committee on Disinvestment (CCD), the Disinvestment Minister, Arun Shourie, stressed that all three options would be considered simultaneously. The wider ramifications of the judgment were discussed in depth at the meeting including the impact on as many as 20 public sector companies which were also nationalised like the HPCL and the BPCL. Though he declined to give details on the judicial option, official sources said there was no option but to seek clarifications from the court on the procedure to be followed for other nationalised companies.

Mr. Shourie said that in the case of "judicial option" the Disinvestment Ministry had been authorised to take appropriate steps in consultation with the Attorney-General, the Solicitor-General and the Law Minister. "I have been asked to emphasise that the Government remains committed to economic reforms."

The third option proposed is to split up the IOC into two or three entities and divest portions of this giant company while possibly effecting a merger with the HPCL or the BPCL. Though the IOC was previously not to be touched in the disinvestment process, he clarified that the CCD had now reversed its view on the issue. The proposal had been made as the IOC is not a nationalised company and could thus be divested by way of an executive order. It would also resolve the issue of liberalising up to 50 per cent of the oil retailing sector since the IOC holds an over 50 per cent market share comparable to the joint market share of about 48 per cent of the HPCL and the BPCL.

Mr. Shourie told newspersons that his Ministry and the Petroleum Ministry had been directed to work on this proposal within a time-frame of three months. Some IOC assets would have to remain within Government control such as units in sensitive areas like the northeast. It would thus be for the two Ministries to consider whether the company can be split into two or three entities.

He said the CCD examined the wider ramifications of the Supreme Court decision going beyond merely the two oil companies, HPCL and BPCL. As a result, presentations were made by the Law Minister, Attorney-General, the External Affairs Minister, Yashwant Sinha, and the Finance Minister, Jaswant Singh, apart from Mr. Shourie himself. He took the opportunity to decry the speculation that there was any confrontation between the executive and the judiciary on this issue. "There is no question of it", he said.

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