The government's disinvestment in the Fortune 500 Indian Oil Corporation (IOC) stands postponed till at least the beginning of the next calendar year. At the earliest, the disinvestment can now take place only in the first quarter of 2001.
Petroleum ministry sources say that, as things stand, it is virtually impossible to conduct the disinvestment during the current calendar year. The accounts of the company have not been recast according to internationally-accepted accounting practices and the global coordinators have not been activated.
Moreover, a drop of 21 per cent in the company's net profit during the first quarter of the current financial year has dampened investors' enthusiasm and the company's scrip is being quoted at around Rs 145 "" the lowest so far.
Added to this is the problem of the reorganisation of the oil industry. With the petroleum ministry, the finance ministry and the department of disinvestment taking varying stands on the merger of stand-alone refineries with IOC and Bharat Petroleum Corporation, and the issue of disinvestment in IBP Limited still evading solution, the sources say it is unlikely that all these contentious issues would be resolved shortly to make way for IOC disinvestment.
Even in the unlikely event of these issues being resolved within a month or so, it will take long for IOC to recast its accounts and activate its global coordinators to organise roadshows, the sources point out. Under the circumstances, the earliest the disinvestment can take place is the January-March 2001 quarter, they say.
The government had earlier planned to go in for disinvestment in IOC during the last financial year itself but it was postponed following the petroleum ministry and IOC management's advice to the finance ministry against the move, arguing market conditions were not ripe for the disinvestment.
They had also argued that the government was not going to face any financial crunch in the absence of the disinvestment since it had already raked in an additional revenue of Rs 8,000 crore during 1999-2000 as customs duty because of the steep increase in the international prices of crude oil and petroleum products.
IOC had argued that in case the government disinvested in the corporation at the prevailing rates, it would tell on the credit rating of the company which would have long-term impact on its borrowings.