According to government insiders, the Union Cabinet is poised to consider a proposal to allow 100 percent foreign direct investment (FDI) in state-owned oil refineries in order to clear the regulatory path for the privatization of Bharat Petroleum Corporation Ltd (BPCL).
The Department of Promotion of Industry and Internal Trade will present the move to the Cabinet, which was originally requested by the Petroleum Ministry (DPIIT). The disposal of the Centre's 53% interest in BPCL is a crucial component of the former's Rs 1.75 lakh crore disinvestment plan for FY22.
“If you are asking foreign players to bid, then it is natural to permit 100 per cent FDI,” said a government official. Once cleared, the proposal will no longer require a successful foreign bidder for BPCL to seek approval from the government. There are currently three players vying for BPCL, including Anil Aggarwal’s Vedanta group, and private equity firms Apollo Global, and I Squared Capital’s arm Think Gas. Current FDI regulations only permit 49 per cent FDI in public sector petroleum refiners.
The official noted that while current regulations permit 100 per cent FDI in private sector refining, a clarification would be required since BPCL is also a retailer of petroleum products.