Cabinet okays KRL merger with BPCL

The Cabinet Committee of Economic Affairs today approved in principle Kochi Refinery Ltd's merger with Bharat Petroleum Corporation Ltd.

The modalities for the merger were yet to be decided, senior government officials said.

The finance ministry had expressed reservations about the valuation of KRL and had also questioned the petroleum ministry's proposal to transfer BPCL's holdings in KRL to a trust once the merger was completed. It had instead suggested that the shares be extinguished.

The board of the two companies had approved a swap ratio of 4:9 in January. BPCL holds 54.8 per cent in Kochi Refinery Ltd. Following the merger, the government holding in BPCL will fall to 54.93 per cent from 66.20 per cent.

The Cabinet also cleared a proposal to remove drugs and pharmaceuticals from the purview of the Industrial Development and Regulation Act, 1951 which mandates industrial licensing. The move was prompted as the products were governed by Drugs & Cosmetics Act and the Drug Price Control Order (DPCO), and because 100 per cent foreign investment was allowed in the sector.

The Cabinet took up the standing committee report on the Small and Medium Enterprises Development Bill. The amendments in the Bill would be formulated by a group of ministers, Finance Minister P Chidambaram told reporters after the meeting.

The standing committee report on the Pension Fund Regulatory & Development Authority Bill was also taken up by the Cabinet but no decision was taken regarding the standing committee's recommendations.

The Cabinet approved the creation of an additional 32 posts for the National Manufacturing Competitiveness Council. Although the NMCC had been functioning, Chidambaram said the Cabinet has sanctioned the required staff for the council.

It also approved a bilateral investment promotion agreement between India and Libya with an enforcement period of 10 years. It also cleared amendments to the National Commission for Minority Educational Institutions Act 2004.