The government may clarify that 100% foreign direct investment (FDI) limit through automatic route will be applicable to refiner-cum-retailer BPCL when it becomes a private company after the government sells its 52.98% stake in the company.
“Up to 100% FDI is allowed in private sector in refining, and BPCL is getting privatised by government. The Department for Promotion of Industry and Internal Trade needs to clarify,” a senior finance ministry official said.
Extant FDI policy allows 100% FDI under automatic route in fuel retailing for private sector, but limits it to 49% in PSUs in refining business. Since the 100% FDI under automatic route is already allowed for refining in private sector, another finance ministry official said no amendment to FDI norms is required as BPCL will also become a private company after disinvestment.
Currently, 49% FDI is permitted under automatic route in petroleum refining by PSUs, without any disinvestment or dilution of domestic equity in the existing PSUs.
“Since the Cabinet has already approved privatisation of BPCL and FDI norms allow 100% foreign investment under automatic route in refining in private sector, there is no need for any amendment in FDI policy,” the second official said.
The Centre’s stake in BPCL, which is valued at about Rs 54,200 crore at current market prices, is a key component of its ambitious plan to mobilise Rs 1.75 lakh crore in disinvestment receipts in FY22.
With the second wave of Covid pandemic hampering movement of executives of bidders for asset evaluation leading to delay in completion of due diligence, the bidders have been given comfort of additional time and are now expected to submit financial bids for BPCL around September.
In November 2020, multiple bidders including Vedanta, Apollo Global Management and Think Gas, showed interest for BPCL buyout.
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