LNM Bathinda plan may slip on policy turf
By Rajeev Jayaswal, TNN |
Highlights
NEW DELHI: Hindustan Petroleum Corp���s (HPCL) plans of roping in the LN Mittal group as its equal partner with 50% stake in the Bathinda refinery may face policy hurdles.
FDI norms for the refinery sector allow foreign players to own a maximum of 26% in joint ventures with PSU oilcos. ���FDI in refining sector is capped at 26% if the JV is with a PSU. Under no circumstances can foreign equity in a public sector refinery cross the limit,��� a government official said quoting press note 4 of 2006 series.
Sources said that the Mittal group is talking to the company for a 50% equity stake in the proposed Rs 16,000-crore Guru Govind Singh Refinery in Punjab. The deal is expected to be finalised by month end. Petroleum ministry officials also confirmed that the Mittal group was interested in picking up an equity stake in the Bathinda refinery.
HPCL is expected to consider a proposal in this regard in its forthcoming board meeting scheduled to be held in the Capital in the last week of February, sources said. It is understood that the equity stakes of the two partners have been decided and a formal announcement is expected after the Punjab Assembly elections.
According to sources close to the deal, there has been less probability of public sector Oil India (OIL) joining the project. ���HPCL has decided to accept the Mittal proposal as OIL has not been able to take a decision in this regard,��� a source said. Earlier, OIL had said that it would join hands with HPCL in developing the 9 mmtpa Bathinda refinery. OIL had evinced interest in picking up at least 26% equity stake in the project.
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In the light of current FDI norms, HPCL has two options: Mittal and OIL taking 26% equity each and balance equity being retained by the promoter. Another possibility is that the three companies may have 26% each and balance would be held by Indian public. The HPCL-promoted project has so far been unlucky in finding a partner for the refinery project. Earlier, British Petroleum had walked out of the project after signing an MoU with HPCL.
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