October 8, 2002
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Money > Interviews October 8, 2002 |
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The Rediff Interview/ Ram Naik'How can anyone say I am against divestment?'
In the eye of the storm that the divestment debate has whipped up is Naik who has opposed the strategic sale of public sector oil units and been termed variously as an 'anti-reform' minister. To get to meet him seemed as tricky a task as walking on an oil slick. Even getting to talk to him over the phone seemed quite a task. When Associate Editor Syed Firdaus Ashraf finally got him over the phone, Naik promised to give him "about 20 minutes in the train." Train? "I am travelling to my constituency at Palghar (in Thane, Maharashtra). I will take the Gujarat Mail from Dadar (in Mumbai) at 10 pm. You can meet me for an interview there and can talk to me till we reach Borivili (in suburban Mumbai)," Naik said. True to his word, Naik kept his appointment. In a candid interview, he vehemently brushed aside his critics' opinion that he is anti-reform and anti-privatisation. Why are you opposed to the strategic sale and so keen on an IPO for Hindustan Petroleum and Bharat Petroleum? How will an IPO benefit the government? First and foremost, one should understand the difference between initial public offering and strategic route. The IPO is made to people at large. So the ownership is spread over a number of genuine investors, whereas if you take the strategic route, ownership goes to only one party. Public sector undertakings are national wealth, so they should be spread out among a number of persons, not go only to one party. I feel a public offer is the correct way of divesting the government's stake in a profit making company, particularly of the oil sector. You are being dubbed an anti-reform minister. How do you respond? This is a misconception. It is an intentionally motivated campaign against me. I am not against divestment. If anyone wants proof, they can verify that in the last three years the total proceeds from divestment has been to the tune of Rs 9,075 crore (Rs 90.75 billion), out of which the contribution from oil companies is more than Rs 7,000 crore (Rs 70 billion). This works out to approximately 80 per cent (of total proceeds). So how can anyone say I am against divestment? This is a deliberate campaign to malign me. Would you say that National Democratic Alliance government ministers have been divided into pro- and anti-reform ministers? Again, this is a motivated campaign. I have been saying I am supporting divestment, but if someone wants to continue saying I am against them, what can I do? Out of the entire divestment proceeds, 80 per cent have been contributed by the petroleum industry. All these details are available; you can check out. The idea of divestment is that the government must not run businesses, but hand them over to corporate entities for better performance, like it was done in the case of Balco and Modern Foods. There is a difference. Modern Foods was incurring losses and Balco (Bharat Aluminium Company) too was not making much profit. But the oil companies under consideration now for divestment are making profits. Hindustan Petroleum Corporation has declared 110 per cent dividend and Bharat Petroleum Corporation has declared 100 per cent dividend. Basically, the proposal of divestment was that the loss-making companies should be disposed of first and only then should the profit-making ones be discussed and considered. Then there are other issues regarding security and defence that also call for a debate. The debate is still on, and that is how I look at it. HPCL, BPCL shares have crashed from Rs 280-levels to Rs 150 levels in the past 3 months. The stock market saw an erosion of Rs 65,000 crore (Rs 650 billion) in terms of market capitalization due to slowdown in divestment. The government has not lost money. The speculators have lost it. Those who wanted to make speculative profits had hyped up the figures, which have now come down. Indian government companies are not for speculation. Would you say the petroleum minister's powers will be curtailed if these oil companies are divested? I do not think this question deserves a reply. I am supposed to look at the energy needs of the country and it is necessary for me to see that these needs are met. Moreover, the reforms need to bring in more competition. I am bringing competition in the petroleum sector. We have sanctioned 8,000 new retail outlets to be established by Reliance, Essar, and Oil and Natural Gas Corporation. And this will bring in competition and boost the economy. Critics say the government is in a hurry to sell profit-making public sector units to only certain corporate houses. These critics either do not want to or are not bold enough to face one-to-one discussions. They just think it is worthwhile to malign others. Prime Minister Atal Bihari Vajpayee has said there is an anti-divestment campaign in the country. He said people must look at the success of Balco before criticizing divestment. Was this directed towards you? I am a small man to comment on the prime minister's view. Nobody is against divestment. Those who feel that some Cabinet ministers are against divestment are totally wrong. What is being discussed at present is which public sector units should be divested first, the profit making or the loss-making ones. And if a profit-making company is to be sold then through which route: through public offers or through strategic sector. These are the topics under discussion currently. Do you think that global ratings agency Standard & Poor's downgrade of India's currency rating has anything to do with the government's decision not to divest its stake in oil PSUs? The intrinsic value of Bharat Petroleum and Hindustan Petroleum has not gone down. They have achieved good sales; their profits are the same. Only speculators, who jacked up the prices so that they could earn more, have been disappointed. Divestment Minister Arun Shourie says Indian politicians lack long-term vision. I won't like to comment on his opinion. Did you speak to the prime minister after he defended Mr Shourie? I don't think the prime minister either defended or said anything against any particular person. There has been criticism that you have not allowed oil firms to raise oil prices to actual levels even though the administrative pricing mechanism has been lifted. This is all ill-informed criticism. Some newspapers have a vested interest. Oil companies have the right to alter oil prices every 15 days; they are free to decide prices. When newspapers say the petroleum ministry is deciding the oil prices, they have their facts wrong. A recent article said oil prices should have been raised by about Rs 2.50, but the petroleum ministry ordered that prices should not be increased by over 50 paise. How do you respond to that? The petroleum ministry has not at all commented on any increase in price of oil products. You claim you are pro-divestment. Why is it then that you have an anti-reform image? You must ask those who are writing these articles and projecting this image of mine. Was it necessary to meet Dr Murli Manohar Joshi and Mr George Fernandes who have also been opposing divestment? We are colleagues. When the Cabinet decided this issue (the divestment of HPCL and BPCL) would be finalised in three months, it is our duty to discuss among ourselves to see that some consensus is evolved. We owe it to the government as members of the Cabinet to come to some conclusion. Now, if outsiders feel we colleagues should not meet in a democracy, then I don't think that they understand the meaning of democracy. But you are meeting with ministers who have a swadeshi outlook…. (Interrupts) What is wrong with that? If swadeshi is wrong, then Mahatma Gandhi and Lokmanya Tilak must be thrown into the dustbin. But these meetings are not pro-investment? We are pro-people. We have to devise a method where people at large benefit. We owe it to consumers to ensure that they get products at competitive terms and that is what we are doing. There is a viewpoint that oil companies should stay with the government, because in times of war it is essential that the government must have control over the oil sector. During the Indo-Pak war in 1971, there were three foreign oil companies in India: Caltex, Esso and Burma Shell. These companies did not co-operate with the government leading to improper supplies of aviation fuel, diesel and petrol; and a shortage was created in the country. That is why then prime minister Indira Gandhi decided to nationalise all three companies. People should read about the debate in Parliament when bills for nationalising these three companies were passed. Then one will understand why these companies were nationalised. The situation along the (Indo-Pak) border during the past year has been tense and this has to be taken into consideration. Even during the 1965 war, these companies did not cooperate fully. So lessons have been learnt from past experience. If somebody wants to forget these lessons then I pity him. A country's economic activity depends on its petroleum sector. Those who are writing to malign me have no direct relation with the people. They don't know what happens if petrol or diesel is not available for an hour or two. If a family's only LPG cylinder runs out of gas and is not replaced soon, do you know what happens? These people don't know about the common man's feelings. You are talking about the common man, but don't you think to run a business you have to take practical steps to make a profit? That is not how the government should look at it. Governments have to give social benefit to the people. The government is not a commercial body. Let me say this, probably most editors have not run a business either. I have worked as a company secretary for more than 13 years in Mumbai. I have also worked as a financial consultant. The only thing is I have not gone into speculation. I do know how things operate and I have a background of commerce. I did my BCom in 1954. Probably the editors and those who are writing don't have practical experience of commerce and trade. So the ultimate aim of these oil companies must be to provide energy to consumers. This should be the motto. How has the petroleum controversy affected your image? Nobody said anything against me personally. Even the Congress leaders are not saying anything against Ram Naik. On the contrary after this controversy many people have said efforts were made to malign me. In spite of all these things the common man feels what I am doing is right. What has been the reaction of your constituency over this scam? People react in the same way as they did earlier. Some sort of anger is there in their minds and they feel that attempts are being made to malign me. How do you feel about such allegations against you and about the commotion in Parliament? Making noise is the Opposition's job. Parliament is the place for debate, but the Opposition is not ready for that. When you don't have any argument, you can only make noise. Don't you feel hurt? I feel sorry. When we were in the Opposition, we were demanding a debate and the Congress party refused it. Now, we are in power and the ruling party wants a debate, but the Opposition does not! People are looking at all this.
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Petroleum Minister Ram Naik has been in the thick of things these past few weeks. India's divestment programme is being keenly followed the world over to see how 'serious' the nation is about its economic reforms strategy.