The Union Cabinet on Thursday allowed steel tycoon L N Mittal to acquire a 49 per cent stake in Hindustan Petroleum Corporation’s (HPCL’s) 9 million tonne refinery at Bathinda in Punjab.
The Rs 3,506 crore investment is the largest infusion of foreign capital in the oil refining sector in India and is the first in collaboration with a state-owned oil company.
The investment will be made through Mittal Energy Investments Pte Ltd, a wholly owned subsidiary of Mittal Investments. Foreign investment is expected to give an impetus to the much-delayed project.
The Guru Gobind Singh Refinery also consists of a 1,000 km pipeline from the Mundra port in Gujarat to Bathinda and a crude oil terminal at Mundra. The project cost is estimated at Rs 18,919 crore.
Petroleum Minister Murli Deora expressed satisfaction over the decision and said the project, which was pending for eight years, would soon see the light of the day.
“This will immensely benefit the people of Punjab, with a spurt in industrial activity in and around Bathinda, and also create direct and indirect employment opportunities,” he said.
Shares of Hindustan Petroleum on Thursday rose by nearly 4 per cent after the news came in. The scrip closed at Rs 273.40 on the Bombay Stock Exchange, a gain of 3.97 per cent over Wednesday’s close. The stock rose to as high as Rs 276 a share earlier in the day.
Currently, foreign investment in state-owned refineries is limited to 26 per cent, but the higher Mittal stake was allowed as a one-off to jump start the Bathinda refinery.
The government is giving final shape to a new foreign direct investment (FDI) policy that reviews shareholding patterns and defines conceptually contentious issues such as “indirect and direct shareholding” in companies. With a foreign direct investment target of $30 billion for 2007-08, the imperative to re-define parameters was being felt in the government, Commerce and Industry Ministry officials said.