Indian govt. shows sleight of hand with Hindustan privatisation

Despite the fact that India's Supreme Court has halted the Indian government's privatisation of Hindustan Petroleum Corporation Ltd (HPCL), the petroleum ministry has hit upon a solution that would appeal to all parties involved - sell the HPCL to another government company.

Under the terms of the proposed plan, more than 26% of the government's stake in the oil marketing company would be offered to the Oil and Natural Gas Corporation (ONGC) on a nomination basis. Management of HPCL will be passed on to ONGC.

The ministry is confident that its plan will meet with universal approval. After all, with the sale of HPCL to ONGC, the government will be closer of reaching its target of raising Rs 13,200 crore for the current fiscal year whilst still complying with the Supreme Court ruling. Furthermore, ONGC will gain HPCL's readymade oil retailing network, two coastal refineries and the proposed Bhatinda refinery should it come up.

The icing on the cake is that the opposition parties cannot use the sale for political leverage. Since HPCL will still remain a government-owned company, the opposition cannot use the anti-privatisation card.

ONGC is said to be interested and officials of the company have admitted that ONGC is willing to pay up to Rs 8,000 crore to acquire management control of HPCL.

Of course, the other option is to merge the two companies.

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