The Cabinet Committee on Disinvestment (CCD) has already acquiesced to Naik's demand for ``strategic sector'' status for the Indian Oil Corporation (IOC), the Oil and Natural Gas Corporation (ONGC) and the Gas Authority of India Limited (GAIL). The new status will allow the government to retain a controlling stake of 51 per cent in the three oil PSUs destined to stay market leaders in oil exploration, refining and natural gas distribution.

The fate of Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) will be decided by the Department of Disinvestment (DoD), when it draws up its list of ``strategic PSUs.'' The two petroleum refining and marketing companies have a grip over 25 per cent of the domestic oil market and have both attracted predatory overtures from oil barons at home and abroad.

In an interview that began with Naik refusing to discuss either oil prices or the industry restructuring, the minister swept away most of the cobwebs clouding petroleum sector reforms. He clarified for instance, that the 100 per cent FDI allowed in petroleum refining would not extend to existing refineries and only applied to grassroot projects.

He set records right on IBP Limited saying that he was yet to make up his mind on either a strategic sale or a merger of the company with an existing PSU. He pointed out that the government policy allowed marketing rights as a condition to investment in petroleum refining.''

``We don't want to give them (foreign investors) just marketing rights,'' Naik said. The policy stance rules out a strategic sale in IBP, which has a vast network of 1,500 filling stations all over the country, but no refinery.

IBP was among the 14 PSUs identified for strategic sales at the last meeting of CCD. Naik hinted now that IBP may also be part of the oil PSU restructuring exercise.

``A scheme for either reconstitution or disinvestment by us will be submitted to the Cabinet,'' said Naik, choosing his words carefully. ``The Cabinet,'' he added, ``will take a view.''

The Disinvestment Commission had recommended sale of 33 per cent of government stake in IBP, to bring down the government shareholding to 26 per cent. Market leader IOC has since expressed interest in IBP's retail marketing infrastructure.

Incidentally, Reliance Petroleum Limited (RPL) was also reported to have presented its case for taking over IBP to the petroleum ministry. RPL has a refining capacity of 27 million tonne per annum and will have to set up a retail network to match by 2002, when marketing rights will be freed.

``They have not made any offer to me,'' Naik said categorically. The petroleum minister chose to be ambiguous, though, when pointedly asked if IBP would be part of the oil PSU restructuring exercise. `Restructuring,'' he said, ``has relevance to all oil PSUs.''

Immediately, the restructuring exercise will involve the stand-alone petroleum refineries at Chennai, Kochi, Bongaigaon and Numaligarh. ``Some (of the refineries) will go to Indian Oil and some will go to Bharat Petroleum Corporation,'' the minister said, ``they will either be merged or will be subsidiaries ...'' The planned disinvestment of 10 per cent government stock in IOC, would only come after the restructuring exercise. One of the objectives of the restructuring exercise, the Naik pointed out with a smile, was to ``improve the intrinsic value of IOC's shares.''