Lessons from IBP sale in HPCL privatisation

Vol 7, PW 3 (23 Apr 03) People & Policy
     

LAST YEARS sale of petrol retailer IBP Petroleum is proving to be a valuable learning experience for the disinvestment ministry with the HPCL sale, especially since the financial adviser is the same: HSBC.

We understand most of the documents drafted for the IBP privatisation can be carried over for HPCL after minor changes. For instance the Confidentiality Agreement.

We learn companies signing it will remain bound for three years, as in the IBP case. But the term 'Confidential Information' now includes information made available in the HPCL dataroom.

Unsuccessful bidders will be duty bound to either return or destroy confidential documents. If they choose the latter, they must confirm this in writing to the ministry.

For a consortium, the lead bidder will be liable for any breach of the Confidentiality Agreement by existing or new consortium members. Bidders must inform and take permission from the disinvestment ministry whenever they are legally obliged to make disclosures to other authorities that would appear to violate the terms of the Confidentiality Agreement, unless the law prohibits this.

HPCL's privatisation is also throwing up its own set of concerns. Key among these is the crippling government subsidy on LPG and kerosene.

"The budgetary allocation for the subsidy remains the same as last year," reveals an industry source. "This means that the LPG and kerosene prices should have gone up in line with global prices.

This is not happening and HPCL is bleeding. Everybody wants to know how long this will continue.

An answer has to be found to this problem."