Panel Rejects Opposition To Hpcl, Ibp Selloff

The Core Committee of scretaries on disinvestment has brushed aside objections raised by the petroleum ministry and has recommended that the government holding in Hindustan Petroleum Corporation Limited (HPCL) and IBP Company Ltd be brought down to 26 per cent during the current financial year itself.

The committee, which met here on May 12, was of the view that the disinvestment should go along the lines suggested by the department of disinvestment and as elaborated by finance minister in his budget speech.

The committee did not agree to the petroleum ministry's view that the government should not disinvest in the profit-making public sector undertakings which have been continuously paying dividend for the past many years.

 

As per the estimates made by the department of disinvestment, bringing down government's equity in HPCL from 51 to 26 per cent would yield Rs 800 crore and the disinvestment in IBP would fetch the government Rs 100 crore.

The Navratna HPCL is on a high growth trajectory. It is India's second largest integrated oil company with an annual turnover of Rs 20,512 crore, a 20 per cent refining capacity and market share in the country and is backed by a strong and vast marketing infrastructure.

HPCL came into being in mid- 1974 after the takeover and the merging of the erstwhile Esso and Lube Indian undertakings. Caltex was taken over by the government in 1976 and subsequently merged with HPCL.

Kosan Gas Company, the concessionaires of HPCL in the domestic LPG market, was taken over and merged with HPCL in 1979. HPCL, thus came into being after merging four different organisations at different points of time. The corporation operates two major refineries, one at Mumbai of 5.5 million tonnes per annum (MMTPA) capacity and the other at Visakhapatnam of 7.5 MMTPA capacity. In addition, the corporation also operates lube refinery at Mumbai, the largest in India with a capacity of 335,000 tonnes.

Till 1991, the government had 100 per cent ownership of the company. Between 1992-1994, the government holding in the corporation gradually came down to 60 per cent through government disinvestment.

HPCL, in February 1995, went in for its maiden public issue of 173.5 lakh equity shares with detachable tradeable warrants aggregating Rs 609 crore. The conversion of equity warrants was completed in March 1997. With this, the government's holding in HPCL stands at 51.06 per cent.

IBP Company Ltd became a government company when Indian Oil Corporation purchased the majority ordinary shares of IBP from Steel Brothers and Co Ltd in January 1970.

Subsequently, in September 1972, the government acquired IOC's shares holding in IBP. This company has a subsidiary company, Balmer Lawrie and Company Ltd in which IBP holds about 62 per cent of the share capital.