The decision to go slow on divestment in Nalco is believed to have been taken at the informal meeting Prime Minister Atal Bihari Vajpayee held with senior cabinet colleagues to break the divestment stalemate following the controversy over sale of equity in oil public sector units.

While the meeting decided on strategic sale in Hindustan Petroleum Corporation Limited and public offering of shares in Bharat Petroleum Corporation Limited, divestment in Nalco was put on hold "for the time being", government sources said.

The decision was taken owing to a number of factors including the opposition by Union Coal and Mines Minister Uma Bharti and the Orissa government, led by Bhartiya Janata Dal, an ally of the ruling National Democratic Alliance at the Centre.

Other factors for holding back the three-tier divestment process in Nalco included opposition by its employees who had accorded a hostile reception to a visiting team of officials from Hindalco, a bidder for the due diligence exercise.

After the incident, Nalco management had asked for stopping the due diligence exercise, following which the divestment ministry had said there could be no divestment in the aluminium PSU through American Depository Receipts and domestic issue without clearance for strategic sale in the company.