Chandigarh, March 30
With the Bathinda oil refinery project hitting another technical roadblock, the Punjab government has taken up the issue with the union government to remove all hurdles faced by what is described as the most significant oil project for giving a fillip to the wobbling economy of the state.
Official sources in the state government told The Tribune today that the union department for industrial policy had been approached to enhance the foreign direct investment( FDI) limit in the oil sector from 26 per cent to 49 per cent.
“ Because it will be a major policy decision to be taken at the national level, the issue will go to the union cabinet”, said a senior officer of the state government.“ We have spoken to the right quarters in this regard”, he added.
A meeting between senior officers of the Punjab government and top officers of HPCL related to the refinery project will be held here on April 9. “At the meeting all issues concerning the refinery will be discussed and a programme drawn up to take up work on the project at the earliest.”
India-born steel baron L.N. Mittal had signed an MoU with HPCL on March 24 to become an equal partner in the latter’s Rs 16,000 crore Bathinda refinery. Mittal has to invest Rs 3,300 crore in the venture and will now hold 49 per cent stake in the special purpose vehicle
set up for building the plant and laying a 1,100 km pipeline for bringing crude oil from Mudra port to the refinery site.
Official sources said that as the FDI limit was capped at 26 per cent in Indian oil companies, the union government had been requested to increase it to 49 per cent to put the refinery project, which has been hanging fire for the past five years for various reasons, back on the rails. “ Undoubtedly, Mittal is an India-born steel baron but there is a technical roadblock in his case that is required to be removed. He will be investing money that is covered under the FDI”, said the senior officer.
The refinery project is to be completed by September, 2010. Earlier, its commissioning year was 2003. However, the Amarinder Singh government had rejected the proposal prepared by the previous SAD-BJP government to give concessions to HPCL for setting up the refinery in the state.
On the intervention of Prime Minister Manmohan Singh, a new diluted package of concessions was offered by the state government which was accepted by HPCL. However, even after accepting the new package, HPCL did not show adequate interest in the project as it continued to search for a private partner in the project.
Mittal’s case is the first one of 49 per cent FDI in the Indian refining industry. The remaining 49 per cent equity in the 9 million metric tonnes per annum refinery will be held by HPCL while 2 per cent stake in the project will be held by financial institutions.
