SC decision on HPCL, BPCL may hit airports selloff: Shourie
The apex court's decision could hit plans to sell stakes in New Delhi and Mumbai airports, Disinvestment Minister Arun Shourie said.business Updated: Sep 19, 2003 18:40 IST
The Supreme Court's decision to freeze the privatisation of oil refiners HPCL and BPCL could affect plans to sell stakes in two of the country's biggest airports, Disinvestment Minister Arun Shourie said.
The apex court on Tuesday froze the sale of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corp Ltd, saying the move had to be approved by Parliament because the companies were created under a legislative act.
"It has a much stronger implication, both because of the logic of the judgment and the far-reaching implications," Shourie told Reuters in a telephone interview from Stuttgart, Germany, late on Thursday.
"And then what happens to the privatisation of airports because the Airports Authority of India (AAI) Act says the airports are to be managed, controlled and maintained by the AAI."
Last week, the Cabinet approved a plan to privatise two airports in the national capital, New Delhi, and financial centre Mumbai in a bid to upgrade them to world standards.
The government plans to spin off the airports in New Delhi and Mumbai into companies and then sell 74 per cent stakes in them to a private firm.
The state-owned AAI, the umbrella body that operates the country's 128 airports, would hold a 26 per cent stake in each of the privatised airports while retaining air traffic control and airport security services.
Hundreds of AAI workers began a hunger strike on Thursday to protest against the government plan to privatise the two airports but said there was no disruption in air traffic.
SETBACK TO SELLOFF DRIVE
Shourie, a tough talking minister under whose stewardship the privatisation programme swung back to life with some big ticket sales, said the court ruling was a setback to India's selloff drive and could affect the sale of assets of some firms in states.
"It is a very big setback. This is the second time in one year when momentum has been broken. Last September, there was a three-month delay, after that we picked up. These reforms can only be carried on by momentum."
Last September, the sale of the two cash-rich oil firms, which control 40 per cent of India's $15 billion retail oil market, was deferred by three months due to political differences.
Shourie, a former World Bank economist and newspaper editor, said asset sales in states could also be hit as most state enterprises were taken over by acts of state legislatures.
Several states including Punjab, Andhra Pradesh, Gujarat and West Bengal have embarked on privatisation drives to reform their state-run enterprises.
Among the companies on the block are caustic soda maker Punjab Alkalies and Chemicals Ltd and Punjab Communications Ltd.
The government plans to raise Rs 132 billion ($2.88 billion) through the sale of stakes in state-run units in the year ending March, 2004, but analysts say without the sale of stakes in HPCL and BPCL it will be difficult to reach the target.
First Published: Sep 19, 2003 18:40 IST