NEW DELHI: In a move that could speed up the divestment process of state-run oil companies like BPCL, the Union government is considering a proposal to allow up to 100 per cent foreign investment under the automatic route in oil and gas PSUs that have an ‘in-principle’ approval for disinvestment.According to sources, the commerce and industries ministry has floated a draft cabinet note seeking inter-ministerial views on 100 per cent FDI in Oil PSUs. Sources added that according to the draft note, a new clause would be added in the FDI policy under sections covering the petroleum and natural gas sector.
At present, only 49 per cent FDI is permitted through the automatic route in petroleum refining by public sector undertakings (PSU), without any dilution of domestic equity in existing PSUs. If the proposal gets a favourable response, the ministry will seek approval from the Union Cabinet. The move will facilitate the privatisation of India’s second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL). The government has decided to sell its entire 52.98 per cent stake in the company. The mining-to-oil conglomerate Vedanta had put in an expression of interest (EoI) for the government’s stake. The other two bidders are said to be global funds, one of them being Apollo Global Management. The divestment is a key part of the former’s disinvestment program.
Officials claimed that the move was initiated on the suggestion of the petroleum ministry. By adding this clause, the process of divestment is expected to be smooth. The government has set an ambitious target of achieving Rs 1.75 lakh crore from divestment proceeds for FY22 and the finance ministry is expecting the divestment to net the exchequer over Rs 80,000 crore and is targetted to be completed in this fiscal.
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The move will facilitate the privatisation of India’s second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL), where the government has decided to sell its entire 52.98 per cent stake. Three bidders including Vedanta are said to have submitted EoIs for the company.