New Delhi : The London-based L.N. Mittal group received the Indian government's approval Thursday to form a joint venture with a state-owned oil firm for reviving a petroleum refinery in Punjab.
"The investment by Mittal Investment of Rs.3,506 crore (Rs.35 billion or $855 million) is the first and the largest foreign direct investment brought into the petroleum refining sector in collaboration with a public sector undertaking," an official statement said.
Under the JV, Mittal Energy Investments, an arm of the Luxembourg-based Mittal Investments, and Hindustan Petroleum Corp Ltd (HPCL) will each hold 49 percent equity in the Guru Gobind Singh Refinery and allied facilities at Bathinda, Information and Broadcasting Minister Priya Ranjan Dasmunsi said.
"Financial institutions will hold the remaining 2 percent stake," Dasmunsi told reporters after a meeting of the Cabinet Committee on Economic Affairs presided over by Prime Minister Manmohan Singh.
"With this, the Bathinda refinery will be revived in a big way," he said. "This will enhance the availability of petroleum products in the north. It will also lead to industrialisation and creation of jobs in Punjab."
The project cost has been assessed by the state-run investment advisory SBI Caps at Rs.189 billion ($4.6 billion).
"Mittal Investment will put the project on a fast track. It will create a lot of jobs directly and indirectly in Punjab. There will be industrialization and development of support industries. It will also improve oil security."
The government had approved the Bathinda project in 2000, stipulating that HPCL would induct a JV partner. The project comprises a nine million tonne per annum refinery, a 1,000 km crude oil pipeline from Mundra and a terminal at Mundra.