Bengal to decide on Haldia Petchem stake sale today

The West Bengal government is likely to decide on the sale of stake in Haldia Petrochemicals Ltd (HPL) on Thursday, state industry minister and HPL Chairman Partha Chatterjee said after a meeting of a group of ministers (GoM) on Wednesday. He, however, didn’t specify the details.

Wednesday’s GoM meeting was the second since the submission of price bids on Monday. Officials of Indian Oil Corporation (IOC), the only company to have submitted a formal price bid within the stipulated time, were present at the meeting.

The state government had invited bids for the sale of its 40 per cent stake in HPL. Monday was the last day for price bid submission. The government holds stake in HPL through the West Bengal Industrial Development Corporation (WBIDC).

Chatterjee confirmed there was only one bidder.

TOO MANY TWISTS AND TURNS

• IOC was the sole bidder after companies like ONGC & GAIL backed out
• RIL expressed its interest, apparently after some prodding from the WB govt
• The reserve price is still not decided and the govt can cancel the process if  IOC's bid is lower than the reserve price
• IOC already has close to nine per cent stake in the company and a refinery adajacent to the HPL plant

Reliance Industries Ltd (RIL) had expressed interest in acquiring the government’s stake, apparently after some prodding from the government, after the stipulated time, government sources said.

The agenda for Wednesday’s meeting wasn’t clear. Earlier, a GoM member had said RIL’s letter and the question of whether the government would go ahead with IOC’s sole bid would be taken up at the meeting. Such is the secrecy being maintained over the matter that officials at WBIDC are strictly barred from entering the boardroom and Chatterjee’s chamber on the fifth floor. “Even when some files are to be scanned or to be given the final nod, none of us are allowed and this is being followed very strictly,” said a WBIDC official working on the fifth floor.

According to a legal expert close to the development, the key issue would be whether IOC’s bid price was more than the reserve price set by the government. “The reserve price is still not decided and the government can easily cancel the whole process if the bid submitted by IOC is lower than the reserve price. Problems would arise for the government if it decides to scrap it, despite IOC’s bid being higher than the reserve price,” he said, adding according to law, the IOC bid should be opened only once the government was ready with the reserve price for its stake. “The government has time up to four days within which to open the price bids,” he said.

It is understood Deloitte, which is handling the stake sale process, was asked to study whether there were any legal loopholes in the process so far.

Even if IOC bags the government stake, The Chatterjee Group, the other principal promoter, would have 30 days to match the bid, according to the right of first refusal agreement it has with the state government. IOC already has nine per cent stake in the company. It also has a refinery adjacent to the HPL plant at Haldia.