The divestment ministry's note on the sale of Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd, which was placed before the Cabinet Committee on Divestment last month, did not touch upon the issue of allowing public sector companies to bid for the two oil firms.

While the note recommended the settlement of "all outstanding issues and the modalities of their resolution through discussions in the meetings of the inter-ministerial group", it skirted the contentious issue of public sector participation in the bidding.

The other point missing in the note was the Bina refinery of BPCL. Though the note suggested the Bhatinda refinery project of HPCL should be hived off and the government should find resources for it directly, it did not comment on BPCL's central India refinery project at Bina.

The divestment ministry also deviated from the practice of circulating the note among the ministries and departments concerned to seek their comments and incorporate them in the note.

The note said, "in view of the urgency to finalise the transaction, this note is being put up without seeking the comments of the ministries or departments concerned. The ministries are, therefore, requested to offer their comments, if any, during the Cabinet meeting".

The note has suggested two models -- Maruti and Nalco -- for the sale of a part of the 35.2 per cent government equity in BPCL in the international market.

As per the Maruti model, the offer will include the participation of Indian and global investors as permitted by law, whereas in the Nalco model, separate domestic and American Depository Receipts or Global Depository Receipts offers will be made.

While recommending the combination of domestic and international offering for BPCL's equity, the note says the value of the 35.2 per cent shares in the public sector oil company works out to around Rs 2,270 crore (Rs 22.7 billion).

"The Indian capital market perhaps lacks the depth and the width to absorb the entire offering. Moreover, an international offering has the advantage of showcasing the country abroad apart from the gains of foreign exchange inflow," it said.