The Hindu Business Line : Reversing to fast forward

If a government want to, it can show initiative and that makes one wonder why such occasions are so rare. This is the feeling one gets reading the happy news that the Bhatinda oil refinery project will be completed after nearly a decade of its conception with the likely appointment of a chief executive from the Petroleum Ministry itself. In June, the Cabinet acted with alacrity by clearing steel tycoon L. N. Mittal’s participation in the project in collaboration with Hindustan Petroleum Corporation Limited. What made this significant in the public-private partnership approach to core projects is that both the parties will have a 49 per cent stake each in the venture with the balance two per cent being held by financial institutions.

Now, a senior Oil Ministry official is to join the Guru Gobind Singh Refinery Ltd.(GGSRL), the holding company of the Rs 18,919-crore Bhatinda refinery project, as the chief executive officer. For a global private investor like Mr Mittal to agree to this arrangement is also a major development that other ministries keen to get their projects beyond the drawing board as quickly as possible should emulate. The Bhatinda project should become operational by 2010-11, the penultimate year of the Eleventh Plan. Till last month, when the Cabinet took the decision to reverse extant norms, 26 per cent Foreign Direct Investment was permitted in public sector projects and 100 per cent under the automatic route in private refining companies. It required the Cabinet to decide the fate of the Mittal proposal for a stake equal to HPCL’s in the project even as the Foreign Investment Promotion Board (FIPB) and the Petroleum Ministry had granted project-specific approval to the steel-maker diversifying into oil refining.

Some critics may smell an unhealthy influence at work here but most should consider the decision a sound one given the Mittals’ record for project implementation and turnarounds the world over. More importantly, the willingness of the Government to reverse its own norms in specific projects should be seen as a precedent for a quicker realisation of those infrastructure schemes that have been hanging fire either because of lack of funds or the unwillingness of private investors to bring in capital as the permissible levels of their commitment were not attractive enough. Power projects delayed in the Tenth Plan and showing little promise of fruition in the Eleventh are a case in point and should underline the importance of a flexible approach by New Delhi on foreign equity stake in public sector projects. Given the infrastructure gaps that threaten growth nothing less will do.

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