The Cabinet Committee on Economic Affairs was to take up the issue of raising foreign direct investment cap in public sector refineries to 49 per cent from the current 26 per cent to facilitate Mittal to pick up stake in the Rs 17,973 crore (Rs 179.73 billion) project.
"The issue was not taken up," a government official said. HPCL had on March 2 signed an agreement with Mittal Investments Sarl, the holding company of L N Mittal, for the 9 million tons refinery in Punjab. Mittal Investments Sarl is picking 49 per cent stake in the refinery project through its 100 per cent subsidiary, Mittal Energy Investments Pte Ltd that has been incorporated in Singapore.
HPCL will also hold 49 per cent stake in the project while the balance two per cent would be allocated to financial institutions. Sources said though, as per the current policy, in case of private Indian companies 100 per cent FDI is permitted under the automatic route, in case of public sector units, FDI in petroleum refineries is permitted only up to 26 per cent.
The current policy also restricts PSU holding to 26 per cent in such projects and makes it mandatory for the balance 48 per cent to be offered to public. The issue is likely to be taken up at the next CCEA meeting, the sources said.