29 May 2007 - 12:42
  • News Code: 105849

Mumbai: State-run Hindustan Petroleum Corp (HPCL) is seeking legal opinion on its 49 per cent equity partner Lakshmi N Mittal changing his investment route for the Rs17,983 crore Bhatinda refinery project.

Instead of using Luxembourg-based holding firm Mittal Investments to directly invest in the nine-million-tonne refinery in Punjab, India-born Mittal decided to route his Rs3,366 crore investment through a Singapore-incorporated subsidiary, Mittal Energy Investment Pte Ltd.


HPCL, which is an equal partner in the Bhatinda project, with Mittal, holding 49 per cent stake - the remaining two per cent given to financial institutions - wants to study the legal implications of the change in strategy.


Besides having a strong legal and regulatory framework and double tax avoidance treaty, Singapore allows free flow of capital and cross-border transfer of Singapore dollars.


HPCL may also look at routing its investment through a similar subsidiary either in India or abroad. Meanwhile, the cabinet committee on economic affairs (CCEA) is likely to consider on May 31 relaxing foreign direct investment (FDI) norms to allow Mr Mittal pick stake in Bhatinda refinery.


Currently, FDI in a public sector refinery is limited to 26 per cent. CCEA approval is also required as HPCL"s investment in the refinery will exceed the Rs1,000 crore spending limit given to navratna public sector firms.



News Code 105849

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