Indian Cabinet approves tie-up between Mittal and HPCL

Jun 21, 2007 02:00 AM

The Indian government approved the largest-ever foreign direct investment in a public-sector refinery, when it gave the go ahead to steel baron Lakshmi Mittal's purchase of a 49-% stake in a new oil refinery in India's northern state of Punjab.
In the joint venture, Singapore-based Mittal Energy Investments, an arm of the Luxembourg-based Mittal Investments, and the state-run Hindustan Petroleum Corporation Limited (HPCL) will each hold 49 % equity in the Guru Gobind Singh Refinery and allied facilities, Information and Broadcasting Minister Priya Ranjan Dasmunsi said.

Financial institutions will hold the remaining 2-% stake in the joint venture, which will be executed in Bathinda, about 200 km north of the Punjab's capital Chandigarh. The venture was approved by the Cabinet Committee on Economic Affairs (CCEA), which was presided over by Prime Minister Manmohan Singh.
A special cabinet approval was needed because as per Indian rules refineries can be wholly owned by foreign firms, but any tie up with a state-run company is limited to a 26- % holding.

The refinery is scheduled to be completed by September 2010 and will have a 180,000 bpd capacity. It is being built by HPCL, which already operates two coastal refineries with a total capacity of around 260,000 bpd.
"With the joint venture, HPCL's Bathinda refinery will be revived in a big way," Dasmunsi said. "This will enhance the availability of petroleum products in north India. It will also lead to industrialization and creation of jobs in Punjab, and will help in the globalization of HPCL."

The government had approved the Bathinda project in 2000, stipulating that HPCL would induct a joint venture partner. However, seeking expression of interest from 17 multinational companies did not yield favourable results. Eventually an agreement with Mittal Investments, part of ArcelorMittal, the world's top steel firm, was arrived at earlier this year.
India, growing at more than 9 % per annum, is seeking to add to its energy resources by increasing crude oil generation in order to maintain domestic production and rising trade.

Source / Deutsche Presse-Agentur
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