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The divestment process in Haldia Petrochemicals Ltd (HPL) has taken a new turn. Mukesh Ambani-led Reliance Industries (RIL) and state-owned GAIL have opposed a joint bidding proposal from Oil and Natural Gas Corporation (ONGC) and India Oil (IOC), forcing ONGC to pull out from the race to acquire the West Bengal government’s share in eastern India’s largest petrochemical company. Indian Oil is still in the fray. An ONGC source who did not wish to be identified confirmed the company had withdrawn.
The state holds 40 per cent stake, up for sale, in HPL through West Bengal Industrial Development Corporation (WBIDC). WBIDC was considering to allow ONGC and IOC to jointly bid but it dropped the idea after RIL and GAIL opposed it. RIL made its opposition known after its request for an open auction was rejected by the state.
A top official of WBIDC said: “The EoI (expression of interest) mentioned standalone bidding. It could have been amended to allow joint bidding but that would have resulted into another round of legal challenges. GAIL also joined RIL in its protest against joint bidding.”
After Essar Oil, ONGC is the second company to pullout from the stake sale process. Now, RIL, IOC, GAIL and billionaire Anil Agarwal-led Cairn India remain in the fray to acquire the state government’s stake in HPL. IOC already has an 8.89 per cent stake in HPL.
Meanwhile, in a pre-bid meeting held last week the government asked Deloitte, transactional advisor for the divestment, to prepare a final share-purchase agreement that would be circulated among the four bidders before giving in final bids.
Final price bids are expected to be given by October 8; the government’s had intented to get the price bids by end of September. The state had announced it would select the final bidder with the highest value by end of this month. Concerns raised by bidders before putting in final price bids led to a delay.
WBIDC has also agreed to change a clause in the share-purchase agreement that restricted the bidders from selling most of their acquired stake in HPL before five years.
“We are changing the clause 5.b and now, the agreement would ask the selected bidder to maintain majority of its stake — 51 per cent — for the next five years,” the WBIDC official added.
Once the highest bidder is selected, Purnendu Chatterjee-led The Chatterjee Group will get a month to match its price as the Group has the right of first refusal.
