The first task at hand is to calculate the pricing of the centre's stake. Sources in the ministry of petroleum and natural gas said that one practical option is too seek the advice of a merchant banker on the issue.

"This is the only way the government will be assured of a fair deal given that it will be selling out completely," they said. The whole process is likely to be finalised by the end of this year.

The first contender for the joint venture with Lubrizol was the Oil and Natural Gas Corporation (ONGC) which had expressed its interest to the ministry of petroleum and natural gas more than a year ago. This would have given the upstream major a footholdin the highly lucrative lubes market which has, of late, seen a host of international players like Shell, Mobil and Exxon.

If this alliance had fructified, Lubrizol would have brought in new technology and a range of additives which could have been supplied to a host of consumers, including the oil public sector undertakings (PSUs). Petroleum ministry sources said that at the time when ONGC had evinced interest, Lubrizol Corporation had given the government time till the end of December 1997 to offload its entire holding--10 per cent in its favour and the balance to the ONGC.

The American company had, apparently, made it quite clear that it would not consider India as the nodal point in south-east Asia and would, instead, opt for Singapore. There have also been unconfirmed reports that Lubrizol was also eyeing China though company officials refused to comment on the issue. With the new government in place, the company has reportedly been assured that a decision will certainly be taken.

Sources indicatedthat other oil PSUs were also approached to buy out the centre's stake and enter into a joint venture with Lubrizol. The names doing the rounds were Cochin Refineries and IBP though nothing apparently came out of the discussions. The Indian Petrochemicals Corporation was also considered as a potential candidate, but there was no confirmation on this development.

The only obstacle for forming the joint venture with IOC could be the time involved in reaching a decision. When ONGC was the sole candidate in the running, the government was unable to meet Lubrizol's December deadline. By then, ONGC also decided against going ahead with the proposal as its priorities had changed.

IOC is, reportedly, keen on getting things moving quickly. The refining major is likely to avail itself of the services of a merchant banker with whom it is has a comfortable rapport, like I-Sec for instance, to value the government's stake. "The centre would be as keen to divest its holding as it makes little sense clinging on to itwhen a better return on investment is assured," sources said.

Lubrizol India was incorporated in 1966 and has its manufacturing unit in Turbhe village near Navi Mumbai. The company develops, manufactures and markets additive systems for automotive and industrial lubricants and also develops other specialty chemicals.

A second unit for manufacture of extreme pressure additives was commissioned at Taloja, Raigad district, in March 1995. The recent report of the petroleum ministry has stated that Lubrizol India is negotiating for a new technology agreement with its collaborators which will cover technologies for manufacture of additives.