New Delhi, January 27
The grassroots Bathinda refinery has suffered a setback and been put in orbit with the Atal Behari Vajpayee government deciding to sell 34.01 per cent equity in Hindustan Petroleum Corporation Ltd (HPCL) to a strategic investor.

As the promoter of Guru Gobind Singh Refinery (GGSR) at Bathinda, the HPCL has necessarily to take a back seat as the government’s equity in the company has been whittled down to 12 per cent. This leaves the HPCL neither here nor there, according to petroleum industry sources.

Significantly, it has not been obligatory for the strategic partner of the HPCL to undertake and complete the GGSR project at an estimated cost of Rs 9,806 crore as of June 1998 prices.

Though Union Disinvestment Minister Arun Shourie has been categoric that the NDA government remains committed to completing the Bathinda and Bina refinery projects, it is yet to take a final view whether a petro PSU or some other company will step in.

Inevitably critical time will be lost leading to substantial cost overruns. At today’s prices, the cost of the Bathinda project can be upwards of Rs 12,000 crore. This assumes importance as the Letter of Intent for the GGSR was issued nearly seven years ago on April 3, 1996, and the Foreign Investment Promotion Board gave its approval about a fortnight later on April 20.

The decision to privatise the HPCL and the Bharat Petroleum Corporation Ltd (BPCL) as outlined by the Cabinet Committee on Disinvestment (CCD) is awaited in the Ministry of Petroleum and Natural Gas. It is only after the receipt of the CCD’s directives that the Ministry of Petroleum and Natural Gas can move in the matter.

In case the strategic partner of the HPCL is against implementing the GGSR project in Bathinda, Mr Shourie suggested that Oil and Natural Gas Commission (ONGC) or Oil India Corporation (OIC) might be asked to fill the breach. This assurance has also been given to the Punjab Government headed by Chief Minister Capt Amarinder Singh.

It is no secret that the ONGC and the OIC have strong reservations in taking up the Bathinda project. Highly placed sources in the petroleum industry are extremely circumspect in this regard. "There is no logic in the ONGC implementing the GGSR project without any downstream or marketing facilities. It is absurd for the ONGC to have a stand-alone refinery." On its part, the IOC is alluding to the expansion programme under way at the Panipat refinery.

SAD leader and Union Chemicals and Fertilisers Minister Sukhdev Singh Dhindsa had sought Prime Minister Atal Behari Vajpayee’s intervention so that there are no road blocks in implementing the Bathinda refinery project in the wake of the HPCL disinvestment.

In a letter to Mr Vajpayee on December 31, 2002, Mr Dhindsa said, "Now when the HPCL is on the verge of disinvestment, it is causing understandable anxiety to all the Punjabis in general and their respresentatives in particular about the fate of the GGSR project which is yet to gain momentum as far as its execution is concerned."

Stating that the Bathinda refinery is the largest-ever public sector investment in Punjab, Mr Dhindsa urged the Prime Minister to ask the Ministry of Petroleum and Natural Gas to incorporate such provisions so that the strategic partner could be made duty-bound to complete this project. "Failing this, the project could be transferred to one of the public sector undertakings of the Ministry of Petroleum and Natural Gas," Mr Dhindsa said in his letter.

TNS adds from Bathinda:

Claiming that there is no threat to the GGSR project in Phulokhari village falling in Bathinda district, Chairman of the Committee on Fiscal Reforms, Financial Reconstruction and Resources Mobilisation Surinder Singla said Union Disinvestment Minister Arun Shourie had assured him that this mega project would be executed in the next four years by 2007.

"During telephonic conversations today, Mr Shourie has assured me that the Bathinda refinery will be set up and the Union Government stands committed to execute this project as decided at the meeting of the CCD held in New Delhi yesterday. Mr Shourie assured that disinvestment in oil sector companies would not affect the fate of this refinery" Mr Singla said at a press conference here today.

Asked why the "deed of assurance" had not been signed so far with the HPCL which was to implement the GGSR project, Mr Singla maintained that this was not a big issue. He said Chief Minister Capt Amarinder Singh had taken up the matter of the GGSR at the National Development Council meeting recently and extracted a positive response from Mr Vajpayee for setting up the Bathinda refinery project. Capt Amarinder Singh had also met the Chairman of the HPCL and he himself had met Mr Shourie twice to ensure that the GGSR project was executed without any hindrance.

Taking exception to the ONGC Chairman’s statement that the GGSR project is not viable, Mr Singla said the ONGC chief is not the deciding authority.

He insisted that the Bathinda project was cleared by the Congress government headed by Mr P.V. Narasimha Rao at the Centre. He charged the SAD government of Parkash Singh Badal with doing precious little and pandering to vested interests from 1997 to 2002 despite being a partner of the Vajpayee government at the Centre.