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Rediff.com  » Business » Parliament nod not needed for HPCL, BPCL sale: AG

Parliament nod not needed for HPCL, BPCL sale: AG

January 21, 2003 11:12 IST

Attorney General Soli Sorabjee has said the sale of stakes in two state-run oil refiners does not need parliamentary approval, a government official said on Monday.

The attorney general's opinion will give a major boost to the country's stalled privatisation drive because it removes the last roadblock in the much-delayed sale of Hindustan Petroleum Corp Ltd and Bharat Petroleum Corp Ltd.

The government referred the sale of HPCL and BPCL to the attorney general last month after opposition MPs demanded parliamentary approval for the sale of the two firms nationalised by an act of Parliament nearly 30 years ago.

"He (the attorney general) has submitted his report. It is in the divestment ministry's favour. No parliamentary approval is needed," the official, who did not want to be identified, said.

The sale of the two cash-rich refiners now needs to get final approval from the privatisation panel headed by Prime Minister Atal Bihari Vajpayee.

The official said the privatisation panel was likely to meet at the end of January to discuss the sale after the attorney general's advice.

The government plans to privatise Mumbai-based HPCL through a strategic sale and BPCL through a public offering but has set no timeframe for the selloff.

In September, the sale of the two firms was deferred by three months due to differences within the ruling coalition. It was postponed again last month after the government said it would wait for the attorney general's report.

The two firms, which control 40 per cent of the oil products market, have a wide network of retail stations throughout the country. The firms also offer investors a readymade platform to tap India's $15-billion retail oil market.

Analysts said the go-ahead from the attorney general would speed up India's 12-year-old privatisation process which has repeatedly been thrown off track by political differences, labour problems and procedural delays.

"This smoothens the way for privatisation. It also accelerates the entire (privatisation) process," said D H Pai Panandikar, director general of New Delhi-based corporate think-tank RPG Foundation.

The government had initially planned to raise Rs 12,000 crore (Rs 120 billion) in the fiscal year ending March 2003 through the privatisation of state-firms.

It has now admitted it will fall way short of its ambitious target due to the delay in these sales.

Successive governments have failed to meet annual privatisation targets ever since India embarked on the process to sell its 230 state firms, almost half of them loss-making, producing everything from steel to condoms.

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