Gas Authority's of India's Rs 332 crore (Rs 3.32 billion) investment in buying equity in Haldia Petrochemicals Ltd has hit a roadblock with the government ruling that the proposal will first have to be vetted by the Cabinet Committee on Economic Affairs.

"The Navratna board has powers to make investments of up to Rs 200 crore (Rs 2 billion) and investments beyond it require the sanction of the public investment board and the CCEA," sources in GAIL said.

GAIL wanted to make an advance payment of Rs 200 crore by March 31, 2004, the deadline set in by HPL lenders. But government directors on the company board did not agree since the investment cannot be split into Rs 200 crore and Rs 132 crore (Rs 1.32 billion) to circumvent government approval.

The company board in its meeting on March 29 resolved that GAIL may invest Rs 332 crore in HPL at par subject to government approval and for that, it should submit the proposal to the PIB for final clearance by the CCEA.

Noting that first the PIB and then the CCEA approval may take months, sources said the move to make advance payment was nipped as the CCEA may take exception to the fact that GAIL has already committed to the proposal by giving Rs 200 crore as advance against equity even before the submission of the proposal to the PIB.