Ram Naik forced IOC to gobble up IBP

new delhi: the success of ioc in bagging ibp came against serious reservations in the government as well as its own strong last-minute rethink. the victory for the fortune 500 public sector oil giant was preceded by high drama which climaxed by moves on its behalf to get the entire bidding process for ibp cancelled. according to sources, senior officials of the petroleum ministry had sounded out the political leadership on whether the exercise could be aborted. the failed mission followed the recongition that ioc — working under the instructions of petroleum minister ram naik to pull all stops to grab the ibp stake - had bitten off more than it could chew. the final bid of rs 1,153.68 crore made by ioc was actually almost the double of what it had estimated as the worth of ibp's 33.58 per cent stake. indeed, ioc's initial bid figure was rs 590 crore — which, as it turned out when the sealed envelopes were opened, was just rs 5 crore less than that of the second-highest bidder, shell. mr ram naik who adopted a come-what-may approach, however, was not willing to leave anything to chance and directed ioc to up the offer by 100 per cent, saying this could be taken as ibp's 'control premium'. this targeted bidding (some say reckless) shocked the members of the cabinet committee on disinvestment. the outrage of the panel over the mega-bid was most powerfully articulated by cabinet secretary t r prasad, who is learnt to have termed it an imprudent investment. others on the panel were also in agreement. a section of the panel even flirted with the idea of a re-bid, but dropped it after recognising that to do this would create many complications. first, ioc would have had to pay a penalty of rs 75 crore for withdrawal as per the rule specifically put in to discourage non-serious bidders. a psu, it was felt, would find it difficult to justify a one-time charge of this scale. secondly, since the disinvestment process in ibp was at the last-mile stage, calling it off would have meant exposing the company's value to the bidders in the resultant second round. thirdly, the cost of denying a psu the chance to buy the ibp stake at twice the price at which an mnc was offering was considered politically imprudent. nevertheless, the members made plain their unhappiness about the way ioc was forced to bid so high by the petroleum minister. in turn, the minister put up a request on behalf of ioc that the company be allowed to make a presentation defending its bid. but this was turned down by members of the ccd as this would set a wrong precedent. in our eyes, they are just a bidder, and we should not give them a concession that we may not extend to others, finance minister yashwant sinha is believed to have remarked.

Ram Naik forced IOC to gobble up IBP

NEW DELHI: The success of IOC in bagging IBP came against serious reservations in the government as well as its own strong last-minute rethink.

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