Govt returns earnest fee to HPCL, BPCL bidders

NEW DELHI: The Disinvestment Ministry appears to have given up on privatisation of oil PSUs HPCL and BPCL in the near future and has started refunding to bidders the earnest money deposited for becoming advisors, on account of delay in final decision by the government.
The demand from about two dozen bidders seeking to become advisors for privatisation of Hindustan Petroleum and Bharat Petroleum started flowing in after the Cabinet Committee on Disinvestment put on hold any decision on sale of equity in these PSUs for three months following differences within the government.
When contacted, disinvestment secretary Pradeep Baijal confirmed that the Ministry was in the process of returning the earnest fee as merchant bankers who had deposited the sum were demanding it back now.
The bids for advisors were invited by Disinvestment Ministry immediately after government gave an in-principle nod for privatisation of the two oil PSUs in February and the aspirants were asked to file in their applications with an earnest money of Rs 20,000 each.
When contacted, sources in the ministry said that bidders were increasingly becoming restless due to delay and demand for refund could reflect on the entire disinvestment process, where problems were cited as a reason for downgrading of India''s currency rating by international rating agencies.
Sources said the Disinvestment Ministry took a decision to return the earnest money following oral request from the bidders who had submitted expressions of interest (EoI) for both the oil corporations.
The decision entails an outgo of Rs 4.6 lakh for 12 bidders for HPCL and 11 bidders for BPCL, sources said, adding that a virtual who''s-who of the merchant banking community had evinced interest to associate themselves with the process of privatisation of oil PSUs.
Amongst those reported to be in the race for advisors for HPCL and BPCL include HSBC, Lazard, Ernst and Young and KPMG.
It may be recalled that the Disinvestment Ministry''s aggressive plans to push through with HPCL, BPCL disinvestment ran into a rough weather recently when Defence Minister and Samata Party President George Fernandes had publically aired his suggestion for undertaking a mid-term review of the disinvestment process.
After a series of high-level meetings between Prime Minister Atal Bihari Vajpayee, Deputy Prime Minister LK Advani, Finance Minister Jaswant Singh and Fernandes, Petroleum Minister Ram Naik and Disinvestment Minister Arun Shourie, the CCD decided to defer a decision on HPCL, BPCL disinvestment by three months.
The government holds 51.01 per cent in HPCL which has about 4600 retail outlets and 20 per cent market share in retail petroleum products while in BPCL, Government has 66.2 per cent equity.
BPCL has about 4,500 retail outelts and a market share of about 20 per cent in petroleum product sale.