Donآ’t underestimate national security in HPCL sale

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

KUWAIT PETROLEUM, Saudi Aramco and other Middle East companies interested in HPCL would do well to think again.

More than likely Indian authorities will cite "national security" concerns and stall the process if any of them emerge the highest bidder. "In 2001 (privately-owned) Dubai National Airports won the privatisation of ground handling facilities at Delhi, Kolkata, Chennai and Mumbai airports," reveals a source.

"British Airports Authority has an equity stake in this company which is owned by an Abu Dhabi cabinet minister linked to the local ruling family. The file was sent to the home ministry for security clearance and hasn't been seen since.

Nothing is moving on that proposal." Similarly with HPCL, national security concerns are high. "I would be very surprised if any company from the Middle East gets HPCL even if they are the highest bidder," he adds.

"All hell will break loose if HPCL is sold to a Middle East company." Kuwait Petroleum, however, seems least concerned and has retained former Indian Oil chairman M.A Pathan as its lobbyist in Delhi.

Saudi Aramco has hired Salomon Smith Barney. Yet interest from the Middle East is likely to remain a sideshow.

Bankers predict the real fight will be between Reliance, Shell and Exxon. "Reliance has no option but to bid aggressively," reveals one.

"It won't have an outlet for its products when its marketing agreement with IOC and other oil PSUs ends next year. Shell has got big plans in India.

And Exxon is interested for historical reasons." HPCL was an Exxon company before nationalisation. Petronas, TotalFinaElf, BP and ChevronTexaco are also believed to be interested.

"HPCL is the only way for them to get into the Indian petroleum retail business. All these companies have excess products in this region; HPCL's network will come in useful."