Who gets IPCL? Govt to open envelope today

The Cabinet Committee on Disinvestment is set to meet tomorrow to finalise the winner of the Indian Petrochemicals Corporation Limited as we...

The Cabinet Committee on Disinvestment is set to meet tomorrow to finalise the winner of the Indian Petrochemicals Corporation Limited as well as to approve changes in the terms of agreement with the successful bidder.

The meeting, which will follow that of the Secretaries-level Core Group on Disinvestment earlier in the day, will also decide on selling off IPCL’s 50 per cent shares in a joint venture with GE Plastics.

The government is selling off 26 per cent stake or 6.25 crore shares in IPCL for which bids were submitted by Indian Oil Corp, Nirma and Reliance Industries on April 29.

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Though the bids should have been opened the same day, the Ministry of Disinvestment kept it in abeyance until today.

In the case of IBP, bids were opened immediately after their submission and an inter-ministerial group fixed the reserve price soon thereafter.

One speculation for the delay has been that the government wanted to announce the winner after the Budget session (which ends tomorrow) to prevent a furore in Parliament.

According to sources, the second reason for the delay was the change in the terms of agreement which does away with providing government guarantee for the World Bank loan taken for IPCL’s Nagothane gas cracker.

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The changes, which required vetting by the Law Ministry, leave it to the buyer to work out the repayment of the $70-million World Bank loan. Without the government guarantee, the buyer will have to honour the Bank’s covenant which could mean an immediate payment of the loan.

After the disinvestment, the government will hold 33 per cent of which upto five per cent is to be distributed to the IPCL employees.