The government has decided not to allow the Oil and Natural Gas Corporation or government co-operatives to bid for Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd.
According to senior government functionaries, despite objections raised by the ministry of petroleum and natural gas during the December 27 meeting of the Cabinet Committee on Divestment, it was decided that ONGC or co-operatives would not be allowed to take over the oil marketing companies.
In the case of BPCL, the government had decided the percentage of shares to be offloaded through the public offer in domestic and international markets should be increased to 38.2 per cent, as against 35.2 per cent proposed earlier.
The government currently holds 66.2 per cent shares in the company, and post-divestment, its share is set to come down to 26 per cent. BPCL will, therefore, cease to be a government company.
The Cabinet had also decided the government would retain 15 per cent equity in HPCL after offering 34.01 per cent to a strategic partner.
The petroleum ministry had proposed the retention of 26 per cent equity. Currently, the government holds 51.01 per cent stake in HPCL.
In both HPCL and BPCL, 2 per cent of the equity has been earmarked for employees.
The earlier decision was to offer 5 per cent of the BPCL shares and 3 per cent of the HPCL shares to employees at a concessional price.
At the Cabinet meeting on September 7, 2002, it was decided all public sector companies and multi-state co-operatives would be barred from the divestment process.
In special cases, however, the administrative ministry could make a case for allowing certain public sector units to participate in the bidding process. The petroleum ministry pushed its case in the December 27 Cabinet meet.
The privatisation of the oil companies, however, awaits the opinion of Attorney-General Soli Sorabjee on whether the legislature's approval is required. Sorabjee is likely to give his opinion on Monday.