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Wednesday, 2 October, 2002, 17:37 GMT 18:37 UK
Indian oil sell-off hits choppy water
Indian gas distributor
The firms being sold account for 40% of the retail fuel market
Indian Petroleum Minister Ram Naik has shrugged off heavy falls in Indian oil refinery stocks following a government decision to postpone sector privatisation plans.

Ram Naik, India's Petroleum Minister
Ram Naik is seen as privatisation's main opponent
Less than a month ago, on 7 September, Mr Naik - together with Defence Minister George Fernandes - forced through a three-month delay on selling strategic stakes in Bharat Petroleum and Hindustan Petroleum.

The move triggered a sell-off of shares in the two companies, driving their market value down by 30%.

Standard & Poor's downgraded the firms' India's rupee-denominated bonds to junk levels.

But the slide has not perturbed Mr Naik, who told reporters he still felt there was a debate to be had over the security implications of the sell-off.

Security

"It is not appropriate to take a decision on disinvestment of government equity in companies in an important sector like oil on the basis of what market speculators do," he said.

Mr Naik insisted that he did not oppose privatisation in itself, and wanted a debate on the pros and cons of selling strategic stakes or offering shares to the public.

But he said there was a need to work out whether the two oil refiners - who between them control 40% of the $15bn retail fuel industry - should be privatised at all, partly because they are making a profit for the public sector.

"We should see whether the oil sector should be viewed differently in view of security considerations," he said.

Disagreements

India's privatisation process had intended to raise upwards of 120bn rupees, including 10% of Hindustan Petroleum and 5% of Bharat, to help pay off external debts.

Telecoms companies are also on the agenda of Arun Shourie, the country's Disinvestment Minister.

Finance Minister Jaswant Singh is adamant that the only stumbling block is a "debate on the methodology", the Business Standard newspaper reported in late September.

But the petroleum and natural gas and defence ministries are seen as keen to delay the plans.

Mr Naik is no stranger to controversy.

Opposition MPs called for his resignation earlier this year after the government had to cancel the licences of nearly 4,000 petrol stations and cooking gas outlets over allegations that they may have been given to people close to the ruling party.

See also:

30 Sep 02 | Business
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13 Jun 02 | Business
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