Draft cabinet note floated for 100% FDI in oil PSUs approved

New Delhi, June 20 (PTI): The commerce and industry ministry has floated a draft cabinet note seeking inter-ministerial views on a proposal to allow up to 100 per cent foreign investment under automatic route in oil and gas PSUs, which have an ‘in-principle’ approval for disinvestment, sources said.
The move, if approved by the union cabinet, would facilitate privatisation of India’s second biggest oil refiner Bharat Petroleum Corp Ltd (BPCL). The government is privatising BPCL and is selling its entire 52.98 per cent stake in the company.
Sources said that as per the draft note, a new clause would be added in the FDI policy under the petroleum and natural gas sector.
According to the proposal, foreign investment up to 100 per cent under the automatic route would be allowed in cases where an ‘in-principle’ approval for disinvestment of a PSU has been granted by the government.
For BPCL privatisation, mining-to-oil conglomerate Vedanta had put in an expression of interest (EoI) for buying the government’s 52.98 per cent stake in the PSU. The other two bidders are said to be global funds, one of them being Apollo Global Management.
After collating the views, the commerce and industry ministry would seek approval of the union cabinet on the proposal.
As part of the privatization process, BPCL sold its 61.65% stake in Assam-based Numaligarh Refinery Ltd (NRL) for Rs 9,875 crore to a consortium of Oil India Ltd (OIL) and Engineers India Ltd (EIL) (49%) and the remaining 13.65% to the Assam government in March.
At present, only 49 per cent FDI is permitted through automatic route in petroleum refining by the public sector undertakings (PSU), without any disinvestment or dilution of domestic equity in the existing PSUs.
Data from public sector units (PSUs) that have already announced their dividends for FY21 shows that not only have dividends increased to at least a five-year-high, but aggregate net profits of these state-owned companies have also risen.
The government has mopped up Rs 26,104.37 crore as dividend from 23 listed PSUs in FY21 so far, a 123.63% increase over the previous fiscal year, data sourced from Capitaline showed. In the previous two years, dividends drawn by the government from these companies had fallen 42% in FY19 and slipped 22% in FY20.