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Government approves higher foreign stake in refinery

A cabinet panel has allowed Petro Energy Products Co Ltd to more than double the amount of foreign equity in the firm, a government statement said late on Tuesday.

The Cabinet Committee for Economic Affairs also approved the cost of a plan by Petro Energy Products to set up an export-oriented petroleum refinery, the statement said.

The 4.8-million-tonnes-a-year refinery would have foreign ownership of 95 per cent made up of investments by US-based Petrodyne Inc and Indians living abroad. The remaining 5 per cent would be locally held, it said.

The project for a 1.44-million-tonme refinery at Pondicherry was initially approved in 1994 with 40.5 per cent foreign equity and was due to cost Rs 5 billion.

The estimated cost has now risen to Rs 26.52 billion while the approved capacity was hiked to 4.8 million tonnes a year in 1995, the statement said.

The government has also allowed the project's site to be shifted to the Kakinada Port on the Bay of Bengal.

The statement said the project was a second-hand refinery and the company would have to ensure its safe operation.

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