New Delhi: The government will retain veto powers in crucial decisions even after the privatisation of oil refiner Hindustan Petroleum Corporation Ltd (HPCL) through special clauses in the sale agreement.

Though the government is selling its 34 per cent equity stake along with management control in HPCL, special clauses in the shareholders agreement would give the government a degree of continued control even after its shareholding falls to 12 per cent, highly placed sources said here.

The special agreement would ensure that the strategic investor consults government in matters like altering memorandum of association, changing share capital, winding up of the company, disposing of existing assets of the company and pursuing a new line of business that may be detrimental to HPCL's interests.

Besides, the government can also block special resolutions, which it deems not in the interest of public, they said.

The Cabinet Committee on Disinvestment (CCD) on January 26 did not accept Petroleum Minister Ram Naik's contention of retaining minimum 26 per cent stake in HPCL, but decided that enough safeguards would be built in the shareholders agreement to protect government interests, sources said.

The CCD had also decided to offload 35.2 per cent state holding in Bharat Petroleum Corporation Ltd (BPCL) in domestic and overseas markets through a public offering, thereby bringing down government holding to 26 per cent – minimum statutory requirement to have a say in all matters requiring special resolutions under the Companies Act.

PTI