India on Thursday facilitated steel baron L N Mittal's foray into oil refining by allowing him to pick 49 per cent stake in Hindustan Petroleum Corp's Bhatinda refinery, which would become the single largest FDI recipient in the sector.
Mittal Investments plans to acquire the stake in the 9 million tons per annum refinery for Rs 3,365 crore through its 100 per cent arm Mittal Energy Investments Pte Ltd, incorporated in Singapore.
While the current policy permits only 26 per cent foreign direct investment in public-sector petroleum refineries, the Union Cabinet made an exception in Mittal's case.
Petroleum Minister Murli Deora, whose ministry had sought approval for raising the FDI ceiling to 49 per cent, expressed satisfaction with the clearance, saying it would pave the way for speedy implementation of the project and open large employment opportunities.
“The project which has been hanging in the air for the last seven-eight years will now see the light of the day for the benefit of the people of Punjab,” Deora said.
HPCL will hold 49 per cent stake in the Rs 17,973-crore project, while the balance two per cent would be allocated to financial institutions.
The Cabinet approval is specific only to Mittal Energy Investment Pte Ltd, a wholly-owned subsidiary of Mittal Investments Sarl, Luxembourg and the policy restricting FDI to 26 per cent will remain.
“This joint venture will be the largest FDI in PSU refining sector. This will enhance availability of petroleum products in the north,” Information and Broadcasting Minister P R Dasmunsi told reporters after the Cabinet meeting here.
The “large investment project” will lead to spurt in industrial activities in and around Bhatinda apart from augmenting the refinery capacity of the country, Deora said.
The project is expected to be commissioned by 2010-end.
Foundation for the project was laid in 1998 by the then Prime Minister A B Vajpayee. In June 2000, work on the project was restarted by then Petroleum Minster Ram Naik but it got stuck as HPCL could not find a suitable JV partner.
In February this year, the public sector oil company HPCL found a partner in Mittal. The project would be executed by Guru Gobind Singh Refinery Ltd, a 100 per cent subsidiary of HPCL.
Source : DNA India