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BALCO selloff furore rocks Parliament again

BUDGET 2001

The government came under attack in Parliament for a second day on Friday over plans to breathe life into its privatisation programme with the sale of cash-rich aluminium firm BALCO.

Both Pouses of Parliament were adjourned until later in the day after angry lawmakers caused an uproar over a deal which the opposition Congress party has alleged "smacks of corruption" and "reeks of scandal".

"Stop this looting!" shouted deputies milling around the podium of the speaker in the lower house.

"I charge this government with corruption," cried Rupchand Pal, a member of the Communist Party (Marxist). "This government has surrendered to the industrialists."

On Wednesday the government cleared the sale of 51 per cent of its holding in Bharat Aluminium Co Ltd (BALCO) to Sterlite Industries Ltd for Rs 5.51 billion, its first big-ticket privatisation in a decade of economic reform.

Sterlite stocks tumbled in Bombay as the political furore dented investors' initial optimism over the deal.

The BALCO employees union has demanded a police probe, alleging that the firm's assets were being sold off cheaply.

Divestment Minister Arun Shourie, a former World Bank economist, said on Thursday that the entire process was completely transparent and the government was ready for a parliamentary discussion on the issue.

His office has sought to defend the deal, arguing that the company's book value was Rs 7.04 billion of which 51 per cent was Rs 3.59 billion. That meant that Sterlite's offer was Rs 1.92 billion over the book value of its stake.

But opposition leaders demanded that the privatisation should go on only after a full-scale debate in the house, and were not ready to take Shourie's on-the-spot replies.

The minister was not even able to speak in the din.

"We definitely want that this issue to be discussed in detail. We want to know every party's position on the issue," senior Congress leader Madhavrao Scindia, who led the protest in the house, told reporters.

LEASE ON MINES AT RISK

In an impromptu speech before proceedings in the lower house were halted, Scindia said Rs 4.6 billion of the company's reserves and cash surplus had not been included in the valuation and the fact that it had a 15 percent market share was ignored.

"It is most outrageous. A valuer has been appointed who says reserves and surplus are extraneous," he said. "This government is planning to throw away the jewels of the country."

Pressure mounted on the government over the issue outside parliament as the chief minister of the Congress party-led central state of Chhattisgarh threatened to cancel BALCO's mines lease if the deal went ahead.

"We will review the mining lease of bauxite mines assigned to BALCO in view of the fact that the controlling interests would not vest with the public sector anymore," Ajit Jogi said.

The Chhattisgarh cabinet also wanted an explanation from the federal government of its decision to privatise a profitable business ahead of loss-making state-owned firms.

Economic Survey 2000-2001
Budget 2001
Money

EXTERNAL LINK:
Economic Survey on the official Web site of the Ministry of Finance

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