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Major blow to divestment process, says Shourie

THE DOOR has finally shut in the face of India's privatisation programme, according to Disinvestment Minister Arun Shourie. Speaking to the Hindustan Times from Berlin, he said, "The final body blow has come for the second time, almost to the day. It was on September 7 last year when the three-month moratorium on the sale of oil PSUs came into existence. That was a near-fatal blow.

india Updated: Sep 17, 2003 01:52 IST

THE DOOR has finally shut in the face of India's privatisation programme, according to Disinvestment Minister Arun Shourie.

Speaking to the Hindustan Times from Berlin, he said, "The final body blow has come for the second time, almost to the day. It was on September 7 last year when the three-month moratorium on the sale of oil PSUs came into existence. That was a near-fatal blow. Today's court decision will have far-reaching ramifications for India's disinvestment programme."

The Cabinet Committee of Disinvestment (CCD) will meet on October 3 to take stock of the SC ruling and calibrate its strategy to prevent the sell-off drive from running aground. Shourie will go through the process of consulting Law Minister Arun Jaitley and Attorney-General Soli Sorabjee and prepare an options paper for the CCD.

To prevent the disinvestment process from being derailed completely following the SC verdict, the government could take a recourse to introducing a comprehensive De-nationalisation Act that will pave the way for privatising PSUs that were nationalised by parliamentary approval years ago.

In Mumbai, Petroleum Minister Ram Naik said the SC decision was historic. He said it would not have any impact on the 'valuations' of the two oil majors. Naik added: "The market price of the two companies may now fall, but the process of disinvestment will take its own course. We are committed to it." Naik said the government has already taken a decision to hold majority stakes in the ONGC, IOC and GAIL.

HPCL share price crashed by Rs 45.45 to close the day at Rs 344.90, while BPCL fell by Rs 6.90 at Rs 323.35.

The judgement covers only the two oil companies acquired by the government after passing appropriate legislation in Parliament in the 1970s.

Shourie added that the SC verdict would have major implications not only for Central PSUs like HPCL and BPCL but also for other state-level PSUs that had been established through legislative acts.

"This is the difference between India and China. In India, everybody has a veto," said Shourie.

Interestingly, the government had gone ahead with the sell-off process for the two oil PSUs even though the matter was sub judice. Sorabjee had given his opinion in favour of disinvesting the two firms and had said that the disinvestment did not require parliamentary approval. Sorabjee had said that "after analysing all aspects of the matter, parliamentary legislation or sanction or approval is not necessary to effectuate the 'in principle' policy decision of disinvestment in HPCL and BPCL".

The SC ruling states that the government cannot draw any precedent from the Maruti Udyog sell-off. "Maruti cannot serve as a precedent for the Centre as the mode of privatisation of the automobile major was not tested by any Court," the ruling states.

Immediately after the judgement, the advisors to the sell-off were asked to stop the due diligence process by the Department of Disinvestment.

Naik said, "On receipt of the judgement from the SC, the Disinvestment Ministry will study the 20-page judgement and invite comments from the concerned ministries like the Petroleum Ministry and Law Ministry, and the attorney-general. The issue will then be deliberated and the conclusions will be taken up by the Cabinet."

First Published: Sep 17, 2003 01:52 IST