New Delhi (30.07.2021): Oil and gas public sector undertakings (PSUs) will now be free to invite 100% FDI through the automatic route if the government takes an in-principle decision to divest its shares in any of them.

This has opened up the path of the country's second-largest oil refiner Bharat Petroleum Corp Ltd (BPCL) to test the water and negotiate for FDI.

The government holds a 52.98 percent stake in BPCL and may like to monetize its shares to meet its escalating revenue demand in the face of sluggishness in the economy.

The Department for Promotion of Industry and Internal Trade (DPIIT) says that a new clause has been added to the FDI policy for the oil and natural gas sector. "Foreign investment up to 100 percent under the automatic route is allowed in case an 'in-principle approval for strategic disinvestment of a PSU has been granted by the government," it said.

However, the FDI limit in PSU-promoted oil refineries will continue at 49 percent in line with the decision made in March 2008.

It is learned that two out of the three companies that have put in an initial expression of interest (EoI) for buying out the government's entire 52.98 percent stake in BPCL are foreign entities.

After BPCL changes hands, Indian Oil Corporation (IOC) will remain the only other oil refining and marketing company under direct government control.

Hindustan Petroleum Corporation Ltd (HPCL) is now a subsidiary of state-owned Oil and Natural Gas Corporation (ONGC).