The world’s biggest steel producer L N Mittal’s plan to pick up a 49 per cent stake in state-run HPCL’s Bhatinda refinery has hit a roadblock with the Foreign Investment Promotion Board (FIPB) today deferring the proposal. “The FIPB noted that the country needs more foreign direct investment (FDI) in oil refining. But as under the present policy FDI in public sector refineries cannot go beyond 26 per cent, so a decision was deferred,” sources said.In a separate development, the Petroleum Ministry has moved the Cabinet for allowing 49 per cent FDI in the Bhatinda refinery as an exception to the foreign investment policy. The Cabinet Committee on Economic Affairs had approved the Bhatinda refinery as a joint venture project with HPCL owning no more than 26 per cent stake.However, its agreement with Mittal Investment is for the two companies taking an equal 49 per cent stake in the refinery. The remaining 2 per cent would be given to financial institutions. Since the current equity pattern was not in conformity with the CCEA approval, a Cabinet note has been moved that seeks raising of the FDI cap on a one-time basis. Mittal, through his UK-based subsidiary Mittal Investments, had sought FIPB clearance to invest Rs 3,506 crore for a 49 per cent stake in the Rs 17,983-crore refinery. With the decision being deferred, the HPCL-Mittal combine would have to wait till the government reviews the FDI policy. The company has signed a joint venture agreement with Hindustan Petroleum Corporation Ltd (HPCL). Earlier, UK-based BP had terminated an MoU with HPCL to partner in the Bhatinda refinery. Around 1,993 acre of land has already been acquired at Bathinda for the project. The venture has also taken 230 acres on lease at Mundra, Gujarat, for a crude oil terminal. Land rights for putting the 1,011 km crude oil pipeline from Mundra to Bathinda have been secured. The refinery project, which has been in the pipeline for the last 10 years, was to be managed jointly by HPCL and Mittal Investments.
