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Friday, 6 December, 2002, 10:18 GMT
India oil sell-off back on track
Supporters of hard-line Hindu nationalist group Shiv Sena
Hard-line Hindu nationalists oppose the oil sell-off
The sale of two state-owned Indian oil companies is finally going ahead after feuding ministers settled their differences.

The reinstatement of the privatisation - with a flotation of Bharat Petroleum and the sale of Hindustan Petroleum to a strategic partner - kicked the Bombay Stock Exchange into frantic life.

Hindustan rose more than 22%, with Bharat up 11%, while the overall market was 2% higher by mid-afternoon.

"The market is on fire, as it has received exactly the right kind of trigger that was needed," said Chetan Kapoor, a dealer at KJMC Capital Market.

Between them, the two companies control the domestic fuel market.

The sale should help the government get closer to its target of 120bn rupees (1.6bn; $2.5bn) in privatisation receipts this year. So far it has managed just 50bn rupees.

Reluctant agreement

Prime Minister Atal Behari Vajpayee called a cabinet meeting on Thursday night to try to sort out a war of words at the heart of his Bharatiya Janata Party (BJP).

Petroleum Minister Ram Naik had blocked the original structure of the sell-off, which had called for both companies to be sold to strategic partners.

And Defence Minister George Fernandes had called the whole privatisation process into question, saying that the sale would create security issues and that privatisation amounted to selling the country off to foreigners.

Both are leading lights in the BJP, and popular with the more right wing elements of the party's largely Hindu nationalist power base.

According to the Economic Times newspaper, Mr Fernandes' backing for the sell-off remains reluctant, even though the meeting ended in unanimity.

 WATCH/LISTEN
 ON THIS STORY
Deepak Mehta, Petrowatch
"This will send a strong signal to multinational oil firms who want to invest in India."
See also:

02 Oct 02 | Business
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07 Mar 02 | South Asia
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