Although the last meeting of the Cabinet committee on divestment yielded little, Finance Minister Jaswant Singh came out clearly in favour of divestment of Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.

This is the first clear indication of the finance minister's stand on privatisation.

According to senior government sources, Singh had explicitly agreed to Divestment Minister Arun Shourie's proposal for privatising HPCL and BPCL.

He also agreed in principle Shourie's proposal to bar ONGC and state-owned co-operatives from bidding for HPCL as also doing away with the condition of Rs 2,000 crore (Rs 20 billion) investment by the bidder, they said.

The sources said Singh, in fact, recommended that the Centre retain only 15 per cent in HPCL after its strategic sale.

Petroleum Minister Ram Naik, however, wanted the government to maintain its holding in HPCL at 26 per cent after divestment.

The finance minister had also suggested that the percentage of equity to be offered to the employees of BPCL and HPCL be snipped to 2 per cent so that a higher percentage could be offered for sale.

The original proposal was to offer 5 per cent and 3 per cent to the employees of BPCL and HPCL, respectively.

The divestment ministry later altered its proposal to divest 38.2 per cent in BPCL as opposed to 35.2 per cent earlier through offer for sale to the public in domestic and international markets.

The Centre, which holds 66.2 per cent in the company now, would hold 26 per cent after the sale. BPCL would thus cease to be a government company.

As far as HPCL is concerned, the divestment ministry recommended strategic sale of 34.01 per cent with the government retaining 15 per cent.

The Centre holds 51.01 per cent stake in HPCL now. The petroleum ministry had, however, recommended that the government hold 26 per cent stake in HPCL post divestment.

The divestment ministry also noted that the present demand-supply position of petroleum products did not seem to justify further addition of refining capacity.