New Delhi: Hindustan Petroleum Corp (HPCL) is seeking legal action against India-born billionaire Lakshmi N Mittal. The state-run firm is eyeing the steel baron with suspicion as he proposed changing the investment route for picking 49 per cent stake in the Rs 17,983 crore Bhatinda refinery project.
Mittal’s Luxembourg- based holding firm that was to invest directly in the 9 million tons refinery in Punjab, instead wants to route the Rs 3,366 crore investment through a Singapore- incorporated subsidiary, Mittal Energy Investment Pvt Ltd.
HPCL wants to study the legal implications of the change in strategy, company sources said. Mittal and HPCL are equal partner in the project with 49 per cent stake each. The remaining two per cent will be given to financial institutions.
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 and this may be the primary reason for Mittal to change the investment route, sources said.
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 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 Rs 1,000 crore spending limit given to navratna public sector firms.
With inputs from PTI
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