Let govt divest HPCL to private player

The government’s decision to sell its stake in HPCL to another public sector major ONGC may help the Finance Ministry realise its disinvestment target of Rs 72,500 crore, but this is anything other than disinvestment. The big ticket reform would have been to divest the government stake through a strategic sale to a private player, domestic or global, or alternatively bring down the state control significantly through follow-on issue of shares to the public and allow the oil refiner and marketing giant to run professionally without diktat from either the North Block (headquaters of the finance Ministry) or the Petroleum Ministry. Instead, what is being done is emptying the cash chest of ONGC in favour of the government or making the country’s principal explorer borrow from the market and transfer the proceeds to the owners of the HPCL, which again is part of the government.

The reason being cited for the move to merge HPCL with ONGC is that it would create a global size well-integrated oil major which should be able to absorb uncertainties and volatility of prices in different lines of businesses. It would be like: one business acting as a cushion to another, should market conditions so arise. There is absolutely nothing wrong in this thinking, but let it not be done in the name of disinvestment. Why should the government not decide once and for all, to exit from commercial activities and focus, instead on governance of the basic issues concerning the citizens? The Air India experience is a big reminder of how the public sector firms should be privatised when they are at the peak of their performance so that the government, or the people of the country, get the best price and the proceeds can be utilised for a larger national good.

The argument that energy is a strategic sector and cannot be handed over solely to the private players does not hold much water in the present context when the government is inviting foreign investment with open mind in the defence production. Most of the global oil giants engaged in the life line businesses are owned by the private sector, as is the case in the most strategic area of defence, worldwide. So, let there be no confusion about it, at least on this score. Besides, the petroleum and gas sector suffers from the absence of a credible and independent regulator. If we can have a successful regulator for the financial markets or telecom, why not for oil and gas? Let the government devise its disinvestment strategy in a holistic manner and not for meeting the financial targets alone.