No To 100% Fdi In Downstream Petroleum Sector

The government has decided against allowing 100 per cent foreign direct investment in the downstream petroleum sector. The FDI level will be decided on a case-by case basis.

This decision was taken at a meeting of chief executives of petroleum marketing companies and their marketing directors here on Tuesday. The meeting was chaired by petroleum secretary Probir Sengupta.

The meeting came to the conclusion that permission for 100 per cent FDI in the downstream sector could prove "risky" under certain circumstances. It cited the example of the 1965 war with Pakistan when some multinationals had stopped suppling spares to the Indian Air Force.

 

It was feared that allowing 100 per cent FDI in the energy sector could be dangerous for the energy security of the country. Any disruption in the supply of petroleum products could bring the country's economy to a halt.

Some of the participants said that since 100 per cent FDI was allowed in the upstream sector, the same could be extended to the downstream sector too. However, the secretary opposed the move saying that any disruption in the upstream sector did not have the same impact as the stoppage of work in the downstream sector.

Sengupta is reported to have said that if drilling operations in the exploration fields come to a standstill even for a month, the consumer would not be effected much. However, if the supplies of petroleum products is disrupted even for a few days, there could be chaos in the country.

The government has already allowed oil companies for strategic alliance and tie-up with private parties, including multinationals, in order to remain competitive in the international market. The government is hopeful that oil companies would gain state-of-the-art technology from such tie-ups.