NEW DELHI, 17 September 2003 — The Supreme Court yesterday prevented the sale of two state-owned fuel companies without parliamentary approval, a move the government said could have “far-reaching consequences” for its privatization program.
The court said Bharat Petroleum Corp. Ltd. (BPCL) and Hindustan Petroleum Corp. Ltd. (HPCL) were acquired by the government in the 1970s by special parliamentary legislation and therefore required a similar legislative process now to privatize them.
The ruling was on an appeal against the government decision to sell off the firms, filed by the Center for Public Interest Litigation and the Oil Sector Officers Association, a workers’ union.
After months of postponements, the Indian Cabinet had in January cleared the sale of stakes in the two firms, which had been staunchly resisted by some key allies of Prime Minister Atal Behari Vajpayee, including Defense Minister George Fernandes and Petroleum Minister Ram Naik.
In the last parliamentary session, MPs berated the government for bypassing Parliament in taking the crucial decision.
After the ruling yesterday, Disinvestment Minister Arun Shourie said that the court decision would have “far-reaching consequences” for a number of companies including textile firms which were also nationalized through legislation. “If for each of these, one has to go through a legislative process, then it will become an impossibly complex process,” he told NDTV television.
Analysts said that while the court decision would not bring the entire privatization program to a halt, it would certainly affect investor sentiment and the stock market.
In morning trade the two oil firms’ stocks fell sharply on the Bombay Stock Exchange with HPCL down 53.45 rupees or 13.69 percent to 336.90, while BPCL fell 35.05 rupees or 10.61 to 295.20.
