The oil sector is the next major focus area for the department of disinvestment (DoD). The department has circulated a slew of proposals for divestment of government stake in five of the public sector oil companies.
It has proposed a plan for disinvestment of 25 per cent government equity in Oil and Natural Gas Corporation (ONGC), Indian Oil Corporation Ltd (IOC) and Hindustan Petroleum Corporation Ltd (HPCL).
In addition, it has proposed disinvestment of 30 per cent equity in Bharat Petroleum Corporation Ltd (BPCL) and of 15 per cent in Gas Authority of India Ltd (Gail).
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The DoD estimates the government can raise around Rs 9,500 crore from sale of equity in these three companies alone.
In addition, it has proposed disinvestment of government stake to a strategic investor in HPCL and BPCL.
However, for the companies in which the DoD has recommended immediate disinvestment, the petroleum ministry is opposing the move on the grounds that since the government will retain 51 per cent stake in all the three oil majors, it would be wrong to divest limited stake at the current low share prices.
It has, in fact, stated that vertical integration of these three companies with Indian Petrochemicals Corporation Ltd would increase share value by around Rs 1,00,000 crore.
The case for disinvestment in HPCL and BPCL has been built on the grounds that with the administered pricing mechanism (APM) being dismantled in April 2002, there is a need to open up refining and marketing in oil products and create a competitive market.
With disinvestment in IBP already underway, the DoD now is working on disinvestment in six of the public sector petroleum companies.
The DoD is planning to focus on divesting government stake in companies in the oil, power and telecom sectors as the big money is likely to come from these sectors.
With disinvestment proceeds becoming increasingly important for the government, at least in the medium term, and with opposition to the process toning down, the DoD has stepped up the pace of work.
It expects to finalise disinvestment in 13 companies this fiscal, and the number can go up further, say officials.
The DoD has prepared a disinvestment plan for the period 2001-04 in which it has listed out the companies which it expects to disinvest over this period.
In a policy statement made earlier this year, the DoD had stated that it plans to complete sale of all non-strategic central public sector enterprises (CPSEs) within the next five years. The department had stated that it would obtain the decision of the government on disinvestment or strategic sales in all non- strategic CPSEs within the next 3-4 years and complete the sell-off process within a 5-year time frame.
The Planning Commission has set a Rs 75,000 crore target for disinvestment during the Tenth Five-year Plan period, of which Rs 50,000 crore is slated to come in the first three years of the Plan period 2002-05.