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Stalemate on refineries issue to affect sell-off target

Subhomoy Bhattacharjee With no decision yet been taken on the cross-holding of standalone refineries, the government is likely to miss the target of achieving Rs 25 billion revised divestment revenue projected for this fiscal. The cross-holding of refineries was expected to yield Rs 17 billion to the divestment kitty.

While senior finance ministry officials acknowledged that there will be some shortfall, they said Rs 20 billion would be realised.

As of now the government has managed only Rs 7.85 billion, including Rs 5.51 billion from the sale of Balco. The prevailing political uncertainty, however, makes the Rs 20 billion figure appear optimistic, sources said.

The problem arises because no decision has still been taken on buying out all the shares of the four standalone refineries at Bongaigaon, Madras, Numaligarh and Kochi by BPCL, IBP and IOC, even though the fiscal is set to close. Officials of the ministry of petroleum and finance are yet to finalise the share valuation of these companies, without which the sale cannot be completed.

But given the current political climate, there are not too many takers for undertaking the valuation exercise. Sources said the issue is sensitive because though the companies are not going to be out of government's control following the restructuring, there is every possibility that the government be taken to task for apparent under- valuation of the shares.

Further as the decision has to be ratified by the petroleum and finance ministers, who are themselves involved in the political turmoil, the available time frame is too short for the exercise to be completed for all refineries.

It is understood, realising that the time is too short, the finance ministry had at one stage of the Budget-making exercise, decided to target only Rs 20 billion as the possible revenue realisation from divestment in 2000-01. But with the sale of Balco becoming certain, the government was emboldened to jack it up to Rs 25 billion. With no decision yet been taken on the cross-holding of standalone refineries, the government is likely to miss the target of achieving Rs 25 billion revised divestment revenue projected for this fiscal. The cross-holding of refineries was expected to yield Rs 17 billion to the divestment kitty.

While senior finance ministry officials acknowledged that there will be some shortfall, they said Rs 20 billion would be realised.

As of now the government has managed only Rs 7.85 billion, including Rs 5.51 billion from the sale of Balco. The prevailing political uncertainty, however, makes the Rs 20 billion figure appear optimistic, sources said.

The problem arises because no decision has still been taken on buying out all the shares of the four standalone refineries at Bongaigaon, Madras, Numaligarh and Kochi by BPCL, IBP and IOC, even though the fiscal is set to close. Officials of the ministry of petroleum and finance are yet to finalise the share valuation of these companies, without which the sale cannot be completed.

But given the current political climate, there are not too many takers for undertaking the valuation exercise. Sources said the issue is sensitive because though the companies are not going to be out of government's control following the restructuring, there is every possibility that the government be taken to task for apparent under- valuation of the shares.

Further as the decision has to be ratified by the petroleum and finance ministers, who are themselves involved in the political turmoil, the available time frame is too short for the exercise to be completed for all refineries.

It is understood, realising that the time is too short, the finance ministry had at one stage of the Budget-making exercise, decided to target only Rs 20 billion as the possible revenue realisation from divestment in 2000-01. But with the sale of Balco becoming certain, the government was emboldened to jack it up to Rs 25 billion.

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