BPCL sale: Cabinet nod to raise FDI limit

New Delhi: The Union Cabinet on Thursday approved raising the foreign investment limit in privatisation-bound public sector oil refiners, a move that will aid the sale of government stake in BPCL.

Officials said the Cabinet has approved a proposal to allow foreign direct investment (FDI) limit in public sector refineries that are disinvestment candidates to 100 per cent from the current 49 per cent.

At present 49 per cent FDI is allowed in oil refineries promoted by public sector companies under the automatic route.

This limit meant Bharat Petroleum Corporation Ltd (BPCL) couldn't have been sold to a foreign player.

Two out of the three companies that have put in an initial expression of interest (EoI) for buying out the government's entire 52.98 per cent stake in BPCL are foreign entities.

"What has been allowed is raising of FDI limit only for disinvestment cases," an official explained. The FDI limit in PSU-promoted oil refineries will continue at 49 per cent - a limit that was set in March 2008.

As of now, the government is selling the stake in only BPCL. Indian Oil Corporation (IOC), the nation's largest, is the only other oil refining and marketing company under direct government control.

Hindustan Petroleum Corporation Ltd (HPCL) is now a subsidiary of state-owned Oil and Natural Gas Corporation (ONGC).