Anil Agarwal led Vedanta Resources Plc wait to acquire the residual stakes in Hindustan Zinc ltd (HZl) and Bharat Aluminium Company (Balco) may become longer as the Mines Ministry now has decided to seek views of stake holding ministries like Finance and Steel on what should be the future course of action in the stake sale saga despite the fact that it has been advised by the law Ministry to first amend the Act under which both the entities were nationalised , before seeking Parliament”s nod in the matter.
The decision by the Mines Ministry to seek comments of the concerned departments, is being viewed as a part of its delaying tactics in the matter, as even the Attorney General G E Vahanvati had earlier given his go ahead to residual stake sale by suggesting that the Government could sell its shares in the two entities in the open market provided that the prevailing market price is “fair”.
Even the Economic Affairs Secretary Arvind Mayaram had last week said that there is “no legal impediment” in the matter. According to sources privy to the latest development in the protracted case, the Mines Ministry has circulated a draft cabinet note to the Department of Disinvestment (DoD which comes under Finance Ministry”s ambit) and the Steel Ministry, seeking their views on what path needs to be adopted in the matter.
Informed sources said that the need for floating a draft note arose as the Attorney General \\apparently did not touch upon the aspect related to the amendment required in the Act governing HZl and Balco for residual stake sale, when he had been approached for his advice in the matter by the Mines Ministry.
This, industry sources said, just seems to be a mechanism on part of the Government to buy time in the matter, as the main reason behind the Mines Ministry initiating yet another round of consultations (after seeking the law Ministry and the Attorney General”s views on the matter) is that there is a lot of apprehension prevailing within a section in both HZl and Balco that by selling even the residual Government”s stake in them, the companies could lose their PSU status completely.
Once this happens, it may hamper the two companies” chances of exploiting the mines which are currently in their control, as in future the Government may ask them to independently apply for mining licences in order to fulfil their raw material requirements. The Government though seems to be riding a dilemma as by selling its stakes in the two companies would fetch it around Rs 18,000 crore, which would help it in mopping a major part of its Rs 40,000 crore disinvestment target for the current fiscal.
Sources said that once the comments from the stake holding ministries arrive on the draft cabinet note, then the Mines Ministry would prepare its case depending on these views and go for Cabinet nod in the matter before approaching Parliament.The Pioneer had first reported on June 29 that the law Ministry has asked the Government to first seek an amendment in the Act governing both the entities before it decides to seek Parliamentary assent for its residual stake sale in HZl and Balco.
After seeking the law Ministry”s suggestion in the matter, the Mines Ministry had sought Vahanvati”s views on the residual stake sale, and he had recommended that the Government can divest its shares in the two firms by selling them in the open market, but the prevailing price should be considered “fair”. The Government currently holds 29.5 per cent stake in HZl and 49 per cent stake in Balco. The Vedanta Group holds majority stake in both the entities as the Government had sold the controlling stake in these companies between 2001 and 2003.