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CPC
going private despite JVP protest "The tender has come to the final stage and the government cannot cancel it arbitrarily", Treasury Secretary P. B.Jayasundara told The Sunday Times. The government has been negotiating with three companies -- China's Sinopec, India's Bharat Petroleum and Hindustan Petroleum -- to take over another one-third share of the retail outlets owned by the CPC, he said. This was being done under the revised tender procedure where the government was only selling a minority stake to the third player and would retain 51 percent, he added. Bids from the three players in the final bidding stage had been almost equal with only differences of $3-4 million between them, Dr. Jayasundara said. Dr. Jayasundara said the government expected more than $75 million for the one-third share of CPC retail outlets offered to the third player in the petroleum market and rejected reports that the highest offer was only around $50 million. He said the government intended to restructure the CPC to enable it to be more efficient and better able to compete with private companies such as IOC and the third player expected to enter the market under the privatisation arrangement. Dr Jayasundara also warned that further fuel price hikes might be in the offing because the government could not afford to increase subsidies in the face of sky rocketing oil prices. "The government can't say it will subsidise prices at any cost," Dr. Jayasundara told The Sunday Times in an interview. "It can do so only within certain parameters. If these parameters change, the government also has to revisit the situation." "We're telling the CPC to revise prices because the Treasury cannot pay. The Treasury similarly has told those who owe money to the CPC such as the army and the CEB to pay their dues. There's no way the government can increase subsidies with the current high prices." "The other option of increasing the budget deficit is not a valid option as it will have other undesirable implications such as putting upward pressure on the exchange rate and interest rates." Dr. Jayasundara said the Treasury now had to meet new requirements such as drought relief payments. The government also owed Prima Rs 1.5 billion (about $15 million) for the flour subsidy and Shell Gas Rs 400 million which would be paid in rupees. Commenting on reports that a deal with another Indian petroleum firm coming in as third player would result in Indian domination of the petroleum retail business, Dr. Jayasundera said there was no special preference given to India though two Indian firms happened to be in the short list of three. He said there was no reason why, in the context of regional cooperation and global trade liberalisation, two Indian companies operating here could be considered harmful. "I would only worry if we were going to give a bigger stake to IOC as that would restrict competition. The country has to decide on whether it wants to prevent further Indian investments here. If so then why sign a free trade agreement with India?" |
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