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May 28, 2002 | 1225 IST
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Oil firms' selloff may be staggered

Pradeep Puri

The government is planning to stagger the divestment process in three petroleum units - Engineers India Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited - instead of selling them at the same time.

The finance ministry has proposed to the department of divestment that the selloff in these public sector units should be staggered because many of the bidders may be common to all the three.

In case the three PSUs are put up for divestment at the same time, the bidders may become a bit conservative in their bids and the government may not get the best price for its stake, the finance ministry has argued.

Divesting the government stake in stages will give bidders enough time to shape their decisions, the ministry has said, adding that a gap of at least two months will ensure that the bidders get to know about the status of their first bid and, if unsuccessful, could bid more aggressively the second and the third time.

Official sources said though no final decision had been taken on the issue, it was likely that EIL would be taken up for divestment first, followed by HPCL and then BPCL. If the finance ministry's suggestion was accepted, the divestment process in the three PSUs would get over only by the end of 2002, they said.

While the Divestment Minister Arun Shourie had earlier said the proposal for the divestment in HPCL and BPCL would be put before the Cabinet Committee on Divestment within three months of the dismantling of the administered pricing mechanism, the sources said the whole exercise might get delayed.

Before divesting its stake in BPCL, the government might go in for a Rs 15 billion public issue and increase its capital base by Rs 500-600 million, the sources said.

Similarly in HPCL, it would make efforts to resolve the dispute with the Aditya V Birla group over the control of Mangalore Refinery and Petrochemicals Limited before selling it off, they added.

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