The government is unlikely to go ahead with the due diligence for Hindustan Petroleum Corp Ltd till the Supreme Court hears a petition challenging the decision to privatise the oil refiner without Parliament approval, on September 1.
"Data room for due diligence by bidders for the government's 34.01 per cent stake will be ready by next week, by when the Supreme Court will also decide on the petition," a senior government official said after an hour long meeting with office bearers of Oil Sector Officers' Association, which had threatened to block the exercise unless the government decision was ratified by the Parliament.
HPCL due diligence was to begin this week with Reliance Industries Ltd beginning the scrutiny.
OSOA convenor Ashoke Singh said they have asked the government to defer the privatisation of HPCL for at least two years for the company to realise its true potential.
"We have asked the government to set benchmarks and targets for sales and profits for the next two years, by when HPCL's valuation will leap to Rs 44,000 crore (Rs 440 billion)," he said, claiming that last year's doubling of net profit to Rs 1,500 crore (Rs 15 billion) and surge in scrip has seen the company valuation increasing from Rs 8,000 crore (Rs 8 billion) to Rs 22,000 crore (Rs 220 billion).
He said HPCL unions will not allow any bidders to carry out due diligence which includes scrutiny of company books and inspection of company's refineries at Mumbai and Visakhapatnam and select marketing terminals, unless Parliament approval was sought to privatise the refiner which was nationalised through an act of Parliament.
Divestment secretary Dhirendra Singh and petroleum secretary B K Chaturvedi attended Monday's meeting with OSOA.
A government official, who attended the meeting, said OSOA has been asked to outline their concerns so that they can be incorporated in the shareholders' agreement.
"The decision to privatise HPCL has been taken at the highest level and it (the decision) will be implemented.
Today's exercise was to address employee concerns," he said.
Divestment secretary Dhirendra Singh offered no comments on the meeting or the due diligence process.
As per the due diligence schedule, each bidder will be given 12 days for the process and the entire process was to get over by mid-October after which price bids can be called for.
The other bidders for the country's second largest oil firm are British Petroleum, Kuwait Petroleum, Petronas of Malaysia, the Shell-Saudi Aramco combine and Essar Oil.
Leader manager HSBC has informed that the bidders' visit to the data room would be little delayed until October 4, the same time as the visit to HPCL's refineries would be completed.
As for marketing terminals, the last date for all visits by bidders would be mid-October, it said.
Sources said that technical consultant Foster Wheeler has submitted the draft report to HPCL for comments before a final report is made while environmental consultant ENSR has sought more time to submit its draft report.
HSBC has also suggested that additional information about Indian economy, petroleum sector and the refining capacities be provided to the bidders as an addendum to the confidential information memorandum, they added.
Meanwhile, the OSOA filed a rejoinder to the government's reply to Supreme Court notice on the petition challenging the decision to privatise HPCL and BPCL without Parliament nod, Singh said.
He said the comparison to the Balco case, where the Apex Court had upheld the privatisation of the aluminium firm, was 'highly misconceived.'
Listing out the differences between the two cases, the rejoinder stated HPCL and BPCL were created by Acts of Parliament while Balco was not.
"The objects of passing enactments taking over multinationals and forming HPCL and BPCL was to take control over the material resources of the country, viz. petroleum products by the state. This was not there in Balco," he said.
Besides going against the spirit of privatisation policy which states that loss-making PSUs should be divested (HPCL is a highly profitable oil refiner), the company deals in essential commodities while was not the case with Balco.