Policy Paper On Blocking Psu Bids In Selloffs

The core group of secretaries on disinvestment today decided to prepare a policy paper on whether the public sector should be kept out of the government's divestment programme.

The move follows finance minister Jaswant Singh's recent letter to his disinvestment counterpart Arun Shourie suggesting that PSUs be blocked from bidding for other state-owned enterprises. Singh was of the opinion that barring PSUs would help in improving the market sentiment and ensure greater private sector participation.

According to disinvestment ministry sources, the decision whether a PSU should take part in the sell-off process should be on a case-to-case basis. In the case of petroleum companies HPCL and BPCL, the ministry is of the view that other PSUs may be kept out of the race.

An immediate fall out of the proposed policy would be on the plans of ONGC which is keen to diversify into the petroleum marketing business by acquiring one of the two downstream companies on the block.

The cabinet committee on disinvestment (CCD), slated to meet early next week, is likely to delegate the responsibility of preparing the policy paper to the disinvestment ministry. The CCD would also seek the petroleum ministry's views on the sale of government equity in HPCL and BPCL.

Petroleum minister Ram Naik had only recently written to the Prime Minister