Govt to name advisors for oil PSU divestment soon

NEW DELHI: The Disinvestment Ministry plans to invite expressions of interest from merchant bankers to act as advisors to the proposed public offering of Bharat Petroleum Corporation (BPCL) within a fortnight.
The appointment of the advisors is expected to be made by mid-March. The inter-ministerial group (IMG), however, failed to take a decision on the proportion of 35% stake that would be offloaded in the domestic market and overseas markets, as the secretaries to the disinvestment and petroleum ministry did not attend the first meeting.
Government sources said the meeting deliberated on various ratios — 10% in the domestic market and 25% in the overseas market and 15% in domestic and 20% in overseas market — for the proposed public offerings. A decision on the ratios would be taken within a week, these sources added.
The government is also required to decide whether the offering would be made in the US or the European market or both. The IMG is also learnt to have discussed matters of timing of the issue and other details such as the depth of the Indian stock market to absorb a large public offering and recasting the accounts of the company to comply with the Generally Accepted Accounting Principles (Gaap). The government is expected to accept at least two merchant bankers to act as advisors and to lead manage the proposed public offerings.
Also, as was the case with Nalco, audit firms familiar with international accounting practices would be given the mandate to recast the accounts. The BPCL public offering is expected to open only after the HPCL strategic sale has been completed.
The Cabinet Committee on Disinvestment had mandated the disinvestment ministry to dilute government holding in the company to 26% from the current level of 66.2% through an offering of 35.2% in the market and 5% to the employees.
Meanwhile, disinvestment secretary Pradip Baijal told reporters, on sidelines of a seminar, that the advisors for HPCL disinvestment will be appointed in the next five to six days. Merchant banks and consultancy firms have been invited to make a presentation before an IMG on February 17 and 18. The government proposes to offload 34.01% in the company to a strategic partner.
On Nalco disinvestment, where due diligence has been stalled since November, Mr Baijal said due diligence would be restarted after consulting all the stake holders. He, however, declined to commit himself to any time frame for restarting the due diligence.
As for Shipping Corporation disinvestment, Mr Baijal said a core group of secretaries on disinvestment has to meet to firm up transaction documents which would then go to the cabinet for approval. In the case of Air India where privatisation has been held up for the last one and a half years, Mr Baijal said the time was not ripe for re-starting the process. He pointed to the instances of turmoil in the global aviation sector following the incidents of September 11.