HPCL sale on track as GoI sets 17th March deadline

Vol 6, PW 26 (12 Mar 03) People & Policy

IF YOUR company wants to bid for state refiner Hindustan Petroleum, you'd better hurry up.

The deadline for Expressions of Interest is 17th March, four days after this issue of PETROWATCH reaches your desk. Some companies have already sent EOIs.

"The response is good," reveals a source. One overseas banker thinks otherwise: "There is no unbridled enthusiasm.

Anyone can express interest, but that's no indication. The mood is guarded and cautious.

There is uncertainty about the Iraq situation. A number of oil companies are moving away from refining and into upstream assets." He adds: " The price tag for HPCL is likely to be high - between $1.5bn and $2bn.

And there's uncertainty about how privatisation will proceed." Of particular concern is the Preliminary Information Memorandum, which is silent on banning other state-owned oil companies from bidding and is also unclear on whether the new owners will have to carry construction of HPCL's greenfield 9m t/y Bhatinda refinery in Punjab. "If ONGC or any other PSU takes part in any form, it will be a very big negative." Luckily the disinvestment ministry is unambiguous.

"The government has taken a policy decision that PSUs cannot buy HPCL," stresses a source. "That decision stands.

The message is clear: no PSU, least of all ONGC, would be foolish enough to circumvent this and bid. They cannot go against government policy." As for the Bhatinda project, the disinvestment ministry tells us bidders will have an option to either take it or leave it.

"Bhatinda is an optional part of the package for bidders but the government is committed to implement it." He adds: "Their non-inclusion in the PIM does not mean our position has changed."