The issue could not be resolved at a recent secretary-level meeting of the two ministries, and it was decided that a meeting would be organised between Finance Minister Jaswant Singh and Petroleum Minister Ram Naik so that the matter is settled before the government goes ahead with the disinvestment in Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL).
However, petroleum ministry officials said the finance ministry had not yet indicated any date for the ministerial-level meeting, even as the due diligence of HPCL had started.
The officials pointed out that the government would have to settle the issue before financial bids were invited for the two oil companies since investors would like to have a clear picture of the companies' finances before putting in their bids.
The petroleum ministry has been contesting the claim for repayment and insisting that the matter be closed for an accurate evaluation of the two companies put up for disinvestment.
On the other hand, the finance ministry says the amount cannot be written off since it will create a bad precedent and send wrong signals to other government-owned companies.
The Cabinet Committee on Disinvestment (CCD) has cleared the proposal to offload the government's 34.01 per cent stake in HPCL to a strategic partner along with management control, and a 35.2 per cent stake in BPCL through a public offer both in the domestic and the international market. Another 5 per cent stake will be offered to employees in both the public sector oil companies at concessional rates.
The CAG audit report for 1993-98 had pointed out that state-owned oil marketing companies had drawn an extra Rs 6,300 crore from the oil pool account as reimbursement for corporate tax payments.
The amount of corporate tax these companies paid during this period was around Rs 4,000 crore less than the notional amount on which the reimbursements were made.
Tentative estimates put the extra reimbursement made to the oil marketing companies at Rs 6,300 crore, taking into consideration that the oil pool account was in operation from 1978-2002.
Half of this went to Indian Oil Corporation, while the balance went to HPCL and BPCL in more or less equal proportions.
