FIPB seeks 49% FDI in state-run refineries

The Foreign Investment Promotion Board ( FIPB) has proposed that foreign direct investment in state-run refineries should be raised to 49 per cent from the existing 26 per cent.

According to sources close to development, the board took this view while considering LN Mittal's proposal of picking up 49 per cent stake in HPCL- Bhatinda refinery by LN Mittal. The board has referred the Mittal case to the cabinet committee.

The board is of the view that the permission for higher proportion of foreign investment cannot be permitted in an isolated case until and unless the entire policy is revised in general.

Currently as per the existing FDI policy, foreign investment in state-run refineries is restricted to 26 per cent.

PTI adds: Mittal, through his UK-based subsidiary Mittal Investments, had sought FIPB clearance to invest Rs 3,506 crore for 49 per cent stake in the Rs 17,983-crore refinery.

With the decision being deferred, HPCL-Mittal combine would have to wait till the government reviews the FDI policy.

The company has signed a joint venture agreement with Hindustan Petroleum Corporation Ltd. Earlier, UK-based BP had terminated the MOU with HPCL to partner in Bhatinda refinery.

Around 1,993 acres of land has already been acquired at Bathinda for the project. The venture has also taken 230 acres on lease at Mundra in Gujarat for a crude oil terminal. Land rights for the crude oil pipeline from Mundra to Bathinda (1,011 km) have been secured.

The refinery project, which has been in the pipeline for the last 10 years, was to be managed jointly by HPCL and Mittal Investments. Both the firms were to have equal number of directors and the chairman's position was proposed to be rotated.