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Fernandes for speedy solution to selloff impasse

BS Political Bureau in New Delhi

All options on the divestment of oil majors Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd were open and no option had been ruled out, sources close to Defence Minister George Fernandes said in New Delhi.

The defence minister left for Oman on an official visit soon after a Cabinet Committee on Security meeting on Saturday. Before leaving, he held a meeting with some party office-bearers, where he indicated he did not want the issue of the oil sector divestment to drag on because the advantage of that would accrue to the Opposition. However, no option had been considered and therefore nothing had been ruled out, he told partymen.

No decision was likely till the third week of October, party sources said. Meanwhile, top government officials told Business Standard that Prime Minister Atal Bihari Vajpayee and the Deputy Prime Minister L K Advani had read newsreports of a "breakthrough", but were unaware of details.

According to Samata Party sources, there are four formulas for the oil sector divestment on the government's table: an outright strategic sale which ensures a high price, but can also result in a private sector monopoly in the oil sector; an IPO route that will ensure that the people of India get control of a national asset, but can also result in a private sector monopoly because these shares can be bought by parties interested in creating cartels by paying a small premium to shareholders; the route suggested by Vijay Kelkar, adviser to the finance minister, that the two units should be hived off and one sold through the IPO route and the other divested through a strategic sale route; the last was selling the two units to a private sector firm, domestic or foreign, with other public sector firms as junior partners.

The last was the least favoured because the junior partner status would undermine the autonomy of public sector units.

The sale of the companies through this route will also yield lower returns than through a strategic sale.

It is possible that any one of these options, including the proposal of PSUs as junior partners, can be accepted after it has been discussed and refined. But a lot more discussion was necessary, Samata sources said.

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