The Ministry of Trade and Industry will soon specify that 100% foreign direct investment (FDI) will be applicable in the privatization of Bharat Petroleum Corp. Ltd (BPCL), while the government leaves the company. This decision aims to remove any possibility of confusion, as FDI is now only allowed up to 49% in oil refineries in the public sector.

“100% of FDI is already authorized in private sector refining. As BPCL is privatized by the government, so should it be. DPIIT (Department for the Promotion of Industry and Internal Trade) will clarify this soon, ”a government official said on condition of anonymity.

The current policy allows up to 49% FDI automatically in petroleum refining PSUs, without any divestment or dilution of national equity in existing PSUs. However, the policy allows 100% FDI through the automatic route of oil refining in the private sector.

“As this is not a policy change and only a clarification, the government can get away with it, although the process of privatizing BPCL is already underway and the deadline for new offers. be over, “said an FDI policy expert from a law firm. 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 the second stage with the receipt of multiple EoIs.

The Vedanta group and two American funds, Apollo Global and I Squared Capital, have reportedly submitted declarations of interest.

The decision to privatize the profitable oil trader is based on the reasoning that the presence of a private sector player would break the state-controlled oligopoly and benefit consumers, said Minister of State for Finance and Business of Anurag Singh Thakur enterprises in Lok Sabha in a written response to a question in March.