Draft cabinet note floated for 100% FDI in oil PSUs approved for disinvestment: Sources

The commerce and industry ministry has floated a draft cabinet note seeking inter-ministerial views on a proposal to allow up to 100 percent foreign investment under automatic route in oil and gas PSUs, which have an 'in-principle approval for disinvestment, sources said.

The move, if approved by the union cabinet, would facilitate the privatization of India's second-biggest oil refiner Bharat Petroleum Corp Ltd (BPCL).

The government is privatizing BPCL and is selling its entire 52.98 percent stake in the company.

Sources said that as per the draft note, a new clause would be added to the FDI policy under the petroleum and natural gas sector.

According to the proposal, foreign investment up to 100 percent under the automatic route would be allowed in cases where an 'in-principle approval for disinvestment of a PSU has been granted by the government.

For BPCL privatization, mining-to-oil conglomerate Vedanta had put in an expression of interest (EoI) for buying the government's 52.98 percent stake in the PSU. The other two bidders are said to be global funds, one of them being Apollo Global Management.

After collating the views, the commerce and industry ministry would seek approval from the union cabinet on the proposal.

At present, only 49 percent of FDI is permitted through automatic route in petroleum refining by the public sector undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)