"The suggestions will be reviewed and even if they are not acceptable, the government will not sell its stake," sources said. The petroleum ministry has indicated in recent reports that there is no way government holding in oil PSUs will go below 51 per cent until the removal of administered pricing mechanism (APM) in 2002.

It is no secret that the big three -- BPCL, IOC and HPCL -- will welcome any move to buy out IBP. At the time the Disinvestment Commission made its recommendation last year on roping in a strategic partner for IBP, the list of interested parties did not only include public-sector companies but also private players from both here and abroad. To this, the IBP top brasssuggested an alliance, which could even lead to a merger, with Madras Refineries, Cochin Refineries and Bongaigaon Refinery and Petrochemicals. The logic was that stand-alone refiners will benefit from a tieup with a marketing company but this did not find acceptance with the ministry.Meanwhile, IBP's plans to go ahead with a Rs 45-crore public issue, which would have reduced government holding from 59 per cent to 51 per cent, early this year did not take off owing to poor market sentiment. The company had also, in the meantime, sought permission from the petroleum ministry to go in for a Rs 350-crore rights issue, which is still pending.

The rights-issue proposal is significant as it will give the centre a strategic exit option if it chooses not to subscribe. Should this happen, it is likely that the alternative candidate could be one of the three - IOC, HPCL or BPCL. However, no decision will be made on the plan till the Sengupta committee submits its report.

IBP has 1500-and-odd retail outlets and,especially, has a strong presence in the north. The same cannot be said of the south which explains why the ministry was not in favour of an IBP alliance with Madras Refineries and Cochin Refineries. Hence, as experts reckon, the best bet for the company will be an alliance with Bharat Petroleum, Cochin Refineries, Madaras Refineries and the to-be-commissioned Numaligarh Refinery where BPCL and IBP are promoters with stakes of 32 per cent and 19 per cent each. The logic is that Bharat Petroleum has a formidable retail presence evenly distributed all over the country with over 4,000 outlets. It could comfortably vend the products of Cochin Refineries and Madras Refineries and, along with IBP, cater to the north-east also. This, in turn, will ensure that there is some parity in market share among the stronger PSUs.

The Sengupta committee has already seen presentations made by HPCL, BPCL and IBP and hopes to complete its exercise in January which will involve Indian Oil and Bongaigaon Refinery. Though none ofthe members has officially made any comment on the work in progress, sources have indicated that the ideas being explored include a holding company and subsidiary concept. This will comprise a conglomerate of BPCL, CRL, MRL, IBP and Numaligarh Refinery as the subsidiaries. The holding company will have a non-executive chairman and managing director with a committee of directors from each of the oil companies.