Left parties have indicated to the ruling United Progressive Alliance that they would like to see a law enacted that will require Parliament's approval for any future divestment in "navratna" public sector companies.

The proposal was put forward during the negotiations to go ahead with the sale of the government's 10 per cent stake in Bharat Heavy Electricals Ltd [Get Quote], top sources in the government told Business Standard on Tuesday.

The Divestment Development: Complete Coverage

"The Left wants cast-iron guarantees that there will be no further dilution of the status of the 'navratnas'," said a source. But Prime Minister Manmohan Singh was not amenable to the idea, as it would effectively impede decision-making, the source said.

The government had proposed that the Left allow it to go ahead with the Bhel divestment through a sale of 7 per cent stake in the PSU, against 10 per cent approved by the Cabinet last month.

With both proposals facing opposition, the government will find it tough to proceed with the Bhel sale stake.

The sources said the Prime Minister was only too conscious that though the Left might not be a part of the government, it was keeping the UPA afloat. Ripples in the relationship with the Left can create serious political problems for the government.

UPA chairperson Sonia Gandhi is expected to discuss the options with the Prime Minister. She has already held two rounds of negotiations with the Left parties, which are not ready to relent.

The sources said Finance Minister P Chidambaram had tried to impress upon the Left parties that the sale of stake through the public offer route would help the Centre unlock value in PSU scrips.

Chidambaram, the sources said, had argued that the government earned 20-30 per cent dividend on the shares with a face value of Rs 10 or Rs 100.

But by selling a part of the shares, it could earn much more. Besides, the proceeds from the sale were to be transferred to the National Investment Fund.

While the corpus of the fund would remain untouched, 70 per cent of the earnings are to be ploughed back to finance social sector schemes and the remaining is to go towards revitalisation of PSUs, the finance minister is learnt to have told the Left leaders.

Left leaders, when contacted, said this was not a formal position made by them at the meeting but only a part of informal discussions on divestment.

Endorsing the Left parties' stand of opposing the Centre's decision to disinvest in Bhel, the MDMK, a constituent of the UPA, asked the government to give up the move.

"If it is allowed, it will open the floodgates of divestment in profit-making public sector companies. The Centre should give up the move," MDMK chief Vaiko told a press conference here after the party's general council meeting.

A resolution adopted at the meeting said the shares of profit making 'navaratna' companies like Bhel should not be sold to the private sector at any cost. It was against the common minimum programme of the UPA, it said.

When asked whether the MDMK had any co-ordination with the Left parties as it was echoing their views on many issues, Vaiko stoutly denied it saying "we support their stand on some issues as we think they are right".