The Indian government is in no mood to let any hurdle come in the way of privatization. They are so hell bound on the issue that they are even tweaking the rules as and when necessary to make it happen. And now on the same front, the government has eased some rules in order to make it easier to sell Bharat Petroleum Corporation Limited (BPCL).
100% FDI allowed in BPCL
Prime Minister Narendra Modi-led Union Cabinet has expanded the scope for foreign direct investment (FDI) in the privatization of the Bharat Petroleum Corporation Limited (BPCL). They have now permitted 100 percent FDI in the public sector refineries.
As per the present policy rules, only 49% of foreign direct investment is permitted in refineries under the public sector. But at the same time, it should be noted that the permissible FDI limit in private sector companies is 100%.
Paving a new path
This decision will also create more opportunities for FDI in state-owned oil sector companies that are set to be privatized. This decision will be in line with the government’s newfound policy of maintaining a bare minimum presence in strategic sectors. Everywhere else, the government is implementing the mantra of ‘monetize or modernize’.
According to one of the officials aware of the happenings, FDI up to 100 percent will be allowed under the automatic route in cases where a public sector undertaking has received in-principle approval for strategic divestment (in the oil and gas sector). This change in the rule was necessary as most of the bidders interested in acquiring BPCL already have certain foreign investments. This list of potential bidders includes companies such as Vedanta, Think Gas, and Apollo Management.
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