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Swadeshi Jagaran Manch opposes HPCL, BPCL stake sale

Surojit Gupta in New Delhi

The Swadeshi Jagaran Manch, an affiliate of the Rashtriya Swayamsevak Sangh, threw its weight behind calls by a section of the government on Wednesday to stop the strategic sale of two state-run refiners.

Differences within the central coalition over the sale of equity in Hindustan Petroleum Corp and Bharat Petroleum Corp have threatened to derail the country's privatisation drive, a milestone in its more than decade-long economic reforms.

"There should not be any strategic sale in HPCL and BPCL. The government has, as a matter of policy, decided to be present in the oil sector for national security," Swaminathan Gurumurthy, co-convenor of the Swadeshi Jagaran Manch, told Reuters.

The SJM, which advocates economic self reliance, has been critical of the reformist economic policies of the BJP-led government.

The group's call comes before a key cabinet panel meeting set for September 7, which is expected to end the deadlock over the sales in HPCL and BPCL, the two refiners that hold 20 per cent each of the $15-billion domestic oil market.

India has sold controlling stakes in several key state-run firms in the past two years, reversing an earlier policy of selling small chunks of shares.

Divestment ministry officials say the petroleum ministry has "strongly opposed" the strategic sale of HPCL and BPCL. It favours a public offer for these firms.

TUG OF WAR

Media reports say Defence Minister George Fernandes, a veteran politician with socialist roots, has also opposed the strategic sale of the two refiners.

Fernandes had ordered multinationals Coca-Cola and IBM out of India in the late 1970s when he was industries minister.

Gurumurthy, a chartered accountant, said the strategic sale of state-run firms could create private monopolies and urged the government to examine the initial public offer route in which the state's holding is brought down to less than 51 per cent.

"A private monopoly can be created by the market but it cannot and should not be created by a government divestment action," he said.

"This is also divestment though not privatisation. Why can't this be adopted in the case of HPCL and BPCL?"

Gurumurthy said the privatisation policy should concentrate on loss-making state-run firms as they were a drain on the government's precious resources.

"Is there any effort to privatise loss-making firms? That's why the privatisation programme has a question mark on it."

There are about 232 state-run firms in India, almost half money losing, which produce everything from condoms to steel and have a combined net worth of about $33 billion.

"I would want the prized shares of HPCL and BPCL with the public at large, who have funds but not good shares in the market," Gurumurthy said.

"This government will create huge public opinion against it if it sells such jewels for its day-to-day expenses... I see bad economics and equally bad politics in this."

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