Alongside, she had also proposed Rs 5,000 crore for buying crude oil to fill strategic underground storages at Mangalore in Karnataka and Visakhapatnam in Andhra Pradesh that India has built to guard against any supply disruptions.
In November last year, the finance ministry halved the equity support and the documents of the interim budget for 2024-25 Sitharaman presented in Lok Sabha on Thursday showed no allocation for equity infusion in current fiscal. The Rs 15,000 crore has now been earmarked for 2024-25 fiscal (April 2024 to March 2025).
Finance Secretary T V Somanathan at a post-budget press conference said the requirement for capex was reassessed and it was brought down to Rs 15,000 crore. This amount has also been now deferred to the next fiscal, he said.
The budget documents did not provide any funds either in the current fiscal or the next for filling of the strategic reserves. While other state-owned oil companies such as Oil and Natural Gas Corporation (ONGC) and GAIL (India) Ltd too have lined up billions of dollars of investment to achieve net zero carbon emissions, the equity support was limited to the three fuel retailers, who had suffered huge losses in 2022 when they held retail petrol, diesel and cooking gas (LPG) prices despite a spike in raw material (crude oil) prices following Russia’s invasion of Ukraine. The Budget for 2023-34 provided Rs 35,000 crore for priority capital investments towards energy transition and net zero objectives, and energy security. Of this, Rs 30,000 crore was towards capital support to oil marketing companies IOC, BPCL and HPCL for green energy and net zero initiatives, and the remaining for purchase of crude oil for caverns at Mangalore and Visakhapatnam. Industry sources said the decision may be linked to a boost in profitability of the three firms in the current fiscal which has partly covered for the losses in the previous 2022-23 (April 2022 to March 2023) fiscal. The three are making good profit this year as the freeze in retail selling prices extends into the 21st month despite crude oil prices having softened.
The board of IOC and BPCL had last year approved rights issues to raise up to Rs 22,000 crore and Rs 18,000 crore, respectively. The government was to participate in the rights issue.
Sources said the two firms plan to halve the rights issue.
In case of HPCL, the government will not make any direct equity infusion as it had sold its majority stake in the company to ONGC in 2018. The infusion is likely to be through ONGC which will make the preferential issue of shares to the government.
BPCL and HPCL are targeting to end net carbon emission from their operations by 2040 and IOC is aiming for 2046 for the same.
The trimming of the equity infusion and deferment of crude oil filing may be linked to the government prioritising spending in a bid to try to limit its fiscal deficit to 5.8 per cent of GDP this fiscal year ending March 31.
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