NEW DELHI, June 22 (UPI) -- India has allowed steel tycoon L N Mittal to buy 49 percent stakes in state-run Hindustan Petroleum Corp's refinery at Bhatinda.
The federal cabinet in its meeting cleared the maiden entry of Mittal into Indian refinery sector. Briefing newsmen after the cabinet meeting Friday, information and broadcasting minister Priyo Ranjan Dasmunshi said the decision is a one-time waiver since there is a 26 percent cap on foreign direct investment in government-controlled refineries.
He said the government is working on raising the foreign investment limit for all state-owned refineries to 49 percent.
Chidambaram said Mittal's is the largest foreign investment in a government refinery. The cabinet also approved HPCL's $500 million investment in the project.
Mittal Investments would now pick up a stake in the 9-million ton refinery for over $500 million through Singapore-based Mittal Energy Investments Pte Ltd, a subsidiary of Mittal.
Mittal and HPCL would now have 49 percent equity each in the Bhatinda refinery and remaining 2 percent would be held by financial institutions, Chidambaram said.
Mittal had acquired stakes in the refinery a year after British Petroleum had withdrawn from the project. The HPCL-Mittal joint venture would also lay a 1,100 kilometre crude oil pipeline from Mundra port in western Gujarat state to Bhatinda in northern Punjab state.
The consortium would also build a crude oil terminal at Mundra port to transport the crude to its new refinery.
Dasminshi said in the event of HPCL selling its stake, Mittal would have an option to buy them at a price determined by the experts.
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