Govt not in a hurry on oil sector divestment

Govt not in a hurry on oil sector divestment
Agencies

New Delhi, Aug 7: The Government today assured the Rajya Sabha that disinvestment in oil sector companies will be carried out only after detailed discussions with ministries and cautioned that public sector oil companies would have to be prepared for competition before Administered Price Mechanism is completely dispensed with in March 2002 RPT 2002 (EDs correct).

``We will be discussing it (disinvestment in oil PSU companies) with the respective ministries before we come out with a joint paper for disinvestment," Disinvestment Minister Arun Shourie said while replying to supplementaries during the Question Hour.

He said all departments and ministries concerned express their views on proposals under consideration and often suggest amendments and improvements to the proposals, adding these are considered by the Government at the time of taking final decisions.

On a suggestion by CPI (M) Member Nilotpal Basu that enterprises such as the profit-making Bharat Heavy Electricals Limited should not be disinvested, Shourie said under the disinvestment policy, only the shares in strategic areas like Defence, Atomic Energy, certain material used in Atomic Energy and Railways would not be considered for disinvestment.

He said Finance Minister Yashwant Sinha had already made it clear that even in public sector enterprises in non- strategic areas, the government would arrive at any disinvestment decision only after considering two factors.

"We will see whether continuation of a public sector in any industry is necessary so as to prevent any market dominance by foreign or Indian firms and whether that area requires a regulatory mechanism to protect consumer interest before the public sector withdraws from there," he said.

Shourie said it was decided that for the non-strategic PSUs, the reduction of government share to 26 per cent would not be automatic and the manner and pace of doing so would be worked out keeping in mind the circumstances of the sector and company in question.

A decision in regard to the percentage of disinvestment -- ie, government share going down to less than 51 per cent or to 26 per cent -- would be taken after determining whether the industrial sector requires PSUs presence as a countervailing force to prevent concentration of power in private hands.

On the disinvestment in the National Fertilisers Limited (NFL), Shourie said no final decision had been taken. In reply to a member's query on providing strategic status to the oil sector, he said it was not possible for the Oil and Natural Gas Corporation alone to undertake exploration work to meet the huge domestic demand and this work had also been provided to the private sector.

He said the decision on disinvestment of 10 per cent of shares of Indian Oil Corporation through the Global Depository Route (GDR) had already been taken and the period had not been finalised. The Minister said disinvestment of IBP would have to be hastened to enable it to face competition as the Government will dispense with APM after March, 2002.

IBP has five per cent of retail trade and it also had an agreement with franchisees in 1,400 petrol stations, he said adding the IBP performance in future would also hinge on the attitude of franchisees after greater competition is unleashed in the sector.