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Mukesh Ambani-led Reliance Industries Ltd’s (RIL) plea for an open auction for Haldia Petrochemicals’ stake sale has been rejected by the West Bengal government.
RIL had requested this for the divestment of the state government’s share in eastern India’s biggest petrochemical company. The West Bengal government, however, is considering a proposal for joint bidding by Indian Oil Corporation and Oil & Natural Gas Corporation, the two public sector majors, which is likely to get the nod.
The bids are expected by August 31 but the date can be extended, said an HPL official. The state government holds about 40 per cent stake in HPL, via the West Bengal Industrial Development Corporation (WBIDC). A senior official at WBIDC said, “How can we go for open auction when it was announced it would be a closed bidding? All the documentation has been made keeping that fact in mind. So, it will be a closed bidding.”
The official added that IOC and ONGC had written a letter to be allowed to make a joint bid. “The letter is still with us and we are considering it. This might sail through,” he added, requesting anonymity.
Currently, five companies are in the race for the stake sale, after Essar Oil made an exit last week. RIL, Cairn India, IOC, ONGC and GAIL are still in the hunt.
In an open auction, there are multiple rounds of bidding and participants can place higher bids after competitors declare their price. The older process, favoured by the other bidders, is a single price one, offered in a sealed envelope.
The HPL official added, “The state government is in a hurry to exit from HPL and their job would have been very complex if open auction was granted, as the Expressions of Interest were made clearly saying it would be closed bidding.”
The due diligence process got over only last week, with all the five companies making a visit to the HPL plant and preparing a final report before placing the bid.
However, the Purnendu Chatterjee-led TCG is another key promoter of HPL. It has the right of first refusal over the state government’s shares put up for sale. TCG has also filed a petition in the Supreme Court, challenging a Calcutta high court bar on it from going to the International Court of Arbitration in France.
