Mittal investments’ Rs 3,506 crore investment in the Bhatinda refinery project, a JV between HPCL and Mittal Energy Investments, has received the go-ahead from the departments of industrial policy promotion (DIPP), public enterprises (DPE) and legal affairs (ministry of Law and Justice).

The 9 million tonnes per annum (mtpa) Bhatinda Refinery project, in which the first and largest FDI has been brought into the refining sector by a PSU, is being executed by Guru Gobind Singh Refinery Ltd, a 100 per cent subsidiary of HPCL, and Mittal Energy Investments, a 100 per cent subsidiary of Mittal Investments (owned by steel tycoon L N Mittal). The two companies have signed a JV with 49 per cent FDI by Mittal.

However, the glitch to the setting up of the Rs 18,919 crore project is that current policy permits only 26 per cent FDI in petroleum refineries set up by PSUs. There is also a ceiling on the investment that Navratna PSEs can undertake to establish in financial joint ventures.

Hence, the ministry of petroleum and natural gas has sought the Cabinet Committee on Economic Affair’s (CCEA)approval to permit 49 per cent FDI in the project and for HPCL to invest 49 per cent in the refinery; the balance 2 per cent will come from Indian financial institutions. According to information available with The Indian Express, DIPP, DPE and the law ministry have given their approvals to the project, which now has to be approved by the CCEA.

However, the law ministry has said that the JV agreement has not been shown to it for vetting and has recommended certain changes to the agreement. The law ministry document also says that since the governing law of the agreement is Indian law, arbitration in Singapore and in accordance with rules of arbitration of the International Chamber of Commerce appears to be “fraught with problems”. Mittal Energy is incorporated in Singapore.

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