The Foreign Investment Promotion Board (FIPB) has cleared a proposal by Madhya Pradesh Energy Corporation Ltd (MPECL) to set up a naphtha-based combined cycle power plant with 98 per cent foreign equity participation.
Marubeni of Japan and Agio group of Singapore will pick up 33 per cent and 65 per cent stake in MPECL amounting to Rs 163.34 crore of the total paid up capital of Rs 167.69 crore.
When the case was discussed earlier by FIPB, it had been deferred on the request from the ministry of power. But MPECL intimated some changes in the proposal, including new foreign partners, on February 27. Subsequently, at a meeting held earlier this month, the board recommended the proposal for the industry ministers consideration.
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Singapores Agio will bring in Rs 109 crore while Marubenis contribution will be Rs 55.34 crore in the joint venture.
Meanwhile, the FIPB cleared a case involving SHV Energy NV of the Netherlands after issuing a warning. SHV Energy which had sought permission to invest in India was asked to explain why the government approvals were not taken for investments made in India through joint ventures and downstream gas projects.
The FIPB, at a recent meeting, cleared the case for post facto ratification of the investments made by the SHV Energy subject to the condition that the company would in future ensure compliance to the conditions of the approval letter.
It has also been made clear to SHV Energy that approval for investments was being given since the company was operating in key infrastructure areas, but no further derivation from this condition would be acceptable to government in future.
SHV Energy had earlier been granted permission to set up a wholly-owned subsidiary with a capital base of $75 million to set up and operate LPG terminals, blending and bottling plants, manufacture of gas cylinders, regulators, valves and ancillary equipment and also develop a LPG dealer network in the country.
Further to this approval several subsidiaries and joint ventures involving SHV Energy had made investments in India without intimating the government a clause which had been laid down by the FIPB at the time of approving the holding company, especially in the case of downstream projects where investments were to be routed through the holding company.
SHV Energy through a letter dated January 21, 1998 clarified that investments were made by nine JVs/ subsidiaries as they were all engaged in the same sort of work for which the government had given the holding company permission. This (the investments through subsidiaries) was done in a bonafide belief that it did not require government approval, the company is reported to have clarified.
SHV Energy, however, has accepted the terms and conditions of the government approval and has unequivocally confirmed that in future it would obtain prior approval of the FIPB in consonance with the conditions stipulated in the approval letter.