The main reason for foreign investment not having come in the refinery sector is that companies are not allowed to market their product. Realisations are higher in marketing than in refining. Since the time private investment has been allowed in the sector, hardly any foreign company has shown any interest apart from giving lip-service to the idea of investing. Only public-sector companies having rights to market their product -- like IOC for its Paradeep project, BPCL for its Bina refinery and HPCL for the Punjab refinery -- have on paper managed to get foreign investments.

Compare this against investment in lubricants, where the sector has been decontrolled. Most of the world's majors like Castrol, Shell, Mobil, British Petroleum, Exxon, among others, have either directly or through a joint venture entered the sector. Though Castrol was present even before the decontrol, it increased its thrust after 1992, when the sector was opened up. The parent company of Castrol has, in fact, given its Indian unit a regional status, emphasising its growing role in the international market.

Recent reports say that IOC will not lift the complete production of the two private-sector refineries -- Reliance and Essar. Under such conditions when a company is not allowed to sell its product in the market, even 100 per cent foreign equity will be of hardly any help.