Union Cabinet eases foreign investment rules to aid BPCL sale: Report

Union Cabinet has reportedly approved increase in FDI limit in the petroleum PSU to 100% from 49% currently

Union Cabinet approved plans on Thursday to allow 100% foreign direct investment in state-run oil companies in which a strategic stake sale is announced, a move to help privatisation of Bharat Petroleum Corp, two government sources said, Reuters reported.

"Foreign investment up to 100% under automatic route is allowed in cases where government has accorded in-principle approval for strategic disinvestment of the PSU (public sector undertaking) engaged in petroleum and natural gas sector," said one of the sources.

India so far allows 49% foreign direct investment in state-run oil and gas companies. The government wants to sell its near 53% stake in BPCL, India's second-largest state-run refiner, in this financial year ending in March 2022, as part of plans to raise Rs 1.75 trillion from stakes in companies.

The discussions with investors on the stake sale of Bharat Petroleum Corp., from which the government could fetch about $7 billion, haven’t progressed much recently, according to people familiar with the matter, Bloomberg reported earlier this week. The disposal may only take place as soon as early next year rather than in 2021, one of the people said, asking not to be identified as the matter is private.

India has already allowed bidders access to the financial data of the refiner in April and some have held meetings with BPCL management, Bloomberg News reported in May. The government’s 53% stake in the refiner is valued at about Rs 52,000 crore based on Monday’s closing price. BPCL shares have risen about 19% so far this year.