DPIIT specifies that 100% of FDI are authorized for the privatization of BPCL
NEW DELHI: To eliminate any possible confusion, the Ministry of Trade and Industry will soon clarify that 100% Foreign Direct Investment (FDI) will be allowed in Bharat Petroleum Corp. Ltd. (BPCL) instead of the 49% allowed for the refining of oil in the public sector. companies as the government seeks to divest its entire stake and privatize the entity.
“100% of the FDI is already authorized in the refining of the private sector. While the BPCL is privatized by the government, it should be the same for it. The DPIIT (Department for the promotion of industry and internal trade) will clarify this point soon, “said a senior government official. said on condition of anonymity.
According to the current FDI policy, up to 49% FDI is automatically authorized in petroleum refining PSUs, without any disinvestment or dilution of national equity in existing PSUs. However, the policy allows 100% FDI automatically in petroleum refining in the private sector.
“As this is not a policy change and only a clarification, the government can get away with it even if the process of privatizing BPCL is already underway and the deadline for new offers is completed, “a law firm FDI policy expert said on condition of anonymity. .
The Center approved the sale of its entire 52.98% stake in BPCL, as well as the transfer of management control to a strategic buyer. The preliminary information note / expression of interest (PIM / EoI) for the strategic divestment of BPCL was published on March 7, 2020. The last EoI submission date has been postponed a few times until November 6, 2020. The transaction has now moved to step two with receipt of several expressions of interest.
In December last year, Oil Minister Dharmendra Pradhan said the government had received three preliminary offers to acquire the majority stake in BPCL. The Vedanta group and two American funds – Apollo Global and I Squared Capital – have reportedly submitted expressions of interest for BPCL.
The decision to privatize the profitable BPCL is based on the reasoning that the presence of a private sector actor will break the state-controlled oligopoly and benefit consumers, said junior finance minister Anurag Singh Thakur in the Lok Sabha in a written response to a question. in March.
Thakur had said that the strategic divestment of PSUs was guided by the basic economic principle that the government should move out of sectors where competitive markets have become major and where the economic potential of these entities could be best discovered in the hands of one. strategic investor due to various factors such as inflow of capital, technological upgrading and efficient management practices and thus contribute to the overall economic growth of the country.
The government’s ambitious divestment program for FY22 could be delayed due to the second wave of the covid-19 pandemic, Divestment Secretary Tuhin Kanta Pandey said at the Mint India Investment Summit 2021 last month.
Pandey, however, was convinced that the â¹The target of 1.75 trillion was achievable. With revenues expected to decline for the second consecutive year in FY22, achieving the divestment target will be crucial for the Ministry of Finance.
A request sent to the Ministry of Trade and Industry went unanswered until the time of publication.
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