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Chidambaram condemns govt decision on GAIL divestment

Former Union finance minister and senior Tamil Maanila Congress leader P Chidambaram today condemned the Centre's decision to sell the Gas Authority of India Limited shares to overseas subscribers at Rs 70 a share.

Addressing reporters at the TMC headquarters in Madras, he termed the decision as scandalous.

Stating that 135 million GAIL shares with a greenshoe option of 20 million shares have been offloaded at Rs 70 per share, he said there was no justification for this when the domestic price the previous day was Rs 79.80 a share.

If the sole purpose of divestment in GAIL was to raise money by recourse to any price -- as the government seemed to believe -- the offer could have been made once again to Indian investors who could have gladly paid Rs 70 per share.

In February 1999, the government had sold 30 million shares in the domestic market at Rs 60 per share to Indian investors.

In the overseas sale, British Gas, Enron, Templeton and Fidelity were reported to have picked up significant quantities of the offer, Chidambaram noted.

He recalled that the then United Front government had approved the proposal to divest GAIL shares in 1997. The issue managers had advised that the offer could fetch a price from Rs 150 to Rs 170 a share.

Because of adverse market conditions, the government was advised that the best price that could be expected was only Rs 115 a share. The government on the advice of GAIL then decided to pull out.

The government's decision to sell at Rs 70 a share would throw the whole process of divestment and the reform of the public sector open to ridicule, Chidambaram pointed out. Doubts would be raised about the integrity of the divestment mechanism.

The government seemed to have acted in desperation and without foresight, he said.

He wanted to know at what level in the government the pricing decision was taken and what were the reasons which forced the government to accept the "ridiculous price of Rs 70 a share".

On the Insurance Regualtory Authority and Development Bill, Chidambaram said the party needed to study the details but agreed with the broad parameters of the bill.

He was also in agreement with divestment of public sector banks, both sick as well as profit-making ones, as recommended by the Narasimham and Verma committees.

Referring to the allegations of cement price hike in Tamil Nadu, Chidambaram alleged that the price of cement (now decontrolled) was being manipulated and the state government remained a silent spectator.

UNI

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