The Hindu : IPCL financial bids submitted

Online edition of India's National Newspaper
Tuesday, Apr 30, 2002

Business

Business

IPCL financial bids submitted

By Our Special Correspondent

NEW DELHI APRIL 29. The public sector Indian Oil Corporation (IOC), Reliance Industries (RIL), and Nirma Industries have submitted price bids for purchase of equity in the Indian Petrochemicals Corporation (IPCL). The bids will now be considered by the Inter-Ministerial Group (IMG) for evaluation.

The financial bids are for acquiring 26 per cent shareholding in the government company along with management control. The submission of these bids appears to be the final phase of disinvestment for IPCL which has taken an inordinately long time owing to the controversy over monopoly control in the petrochemicals industry.

Ever since IPCL was considered for privatisation, the giant player in the petrochemicals sector, Reliance Industries has been seeking to ensure that public sector companies are not allowed to take part in the bidding. Equally forcefully, IOC has been pitching for the takeover, arguing that giving the controlling stake to RIL means creating a monopoly operator in the petrochemicals sector.

The Government, however, ultimately decided to allow both companies to take part in the bidding though IOC has been ruled out of the privatisation of sister oil marketing companies, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). At one stage, IOC was asked to take over one of the IPCL units but the two companies could not reach any agreement over the valuation process.

It was then decided by the Disinvestment Ministry to pose the entire IPCL complex for privatisation.

The Government at present has 59.95 per cent equity in IPCL and will be offloading a 51 per cent stake in two phases. The management control over the company is expected to be transferred to the successful bidder for the 26 per cent stake within the current fiscal. The strategic buyer would then have the right of refusal over the balance 25 per cent equity.

The Oil and Natural Gas Corporation (ONGC) which was expected to be a joint bidder along with IOC today said it would "collaborate" with IOC in case it made a winning bid.

The ONGC chairman, Subir Raha, said the term collaboration could mean a variety of option but the precise manner of tie-up has not been decided. In this context, he stressed the need for ONGC to become a vertically integrated company rather than focussing on its existing core competencies of oil exploration and production.

Send this article to Friends by E-Mail

Business