ONGC, Reliance lock horns over refinery sell offs
State-owned Oil & Natural Gas and Reliance Industries indirectly locked horns over the sell-off of the Indian government's stake in refining firms Hindustan Petroleum and Bharat Petroleum.
By an OGJ correspondent
MUMBAI, Dec. 10 -- State-owned Oil & Natural Gas Corp. (ONGC) and private-sector giant Reliance Industries Ltd., Mumbai, indirectly locked horns over the sell-off of the Indian government's stake in refining firms Hindustan Petroleum Corp. Ltd. (HPCL) and Bharat Petroleum Corp. Ltd. (BPCL).
The debate over India's oil sector privatization turned bitter with ONGC attempting much-needed forward integration, and Reliance trying to further strengthen its hold on the refinery sector, following its recent purchase of Indian Petrochemicals Corp. Ltd. (IPCL).
Disinvestment Minister Arun Shourie said that no sale of government equity in the oil sector would happen until March 2003. At that time, HPCL would be divested through the strategic sale route, while BPCL's sale would be through an initial public offering.
Shourie sought to bar ONGC from bidding on the grounds that the takeover of one public sector company by another is not privatization. However, Oil Minister Ram Naik and Defense Minister George Fernandes have taken the stand that either ONGC should be permitted to bid for the HPCL stake or else Reliance should be barred from bidding, since it already has a 70% market share in the petrochemical sector.
The two ministers have cited the case of Indian Oil Corp., which was barred from the IPCL deal on the grounds that it controlled 60% of the petroleum retail market after its acquisition of IBP Ltd.
"ONGC is an independent, publicly listed and board-managed company, and should be given a level playing field to compete in the private sector," Naik said, adding, "If Reliance is allowed to bid, and ONGC is not, Reliance will turn into a virtual monopoly.