News Oil & Gas

India may halve Budget support to state-run oil firms for energy transition


India’s finance ministry has told state-owned oil refiners it could halve a proposed Rs 30,000-crore ($3.6 billion) package aimed at supporting investments to manage the energy transition.

State-controlled Indian Oil Corp. and Bharat Petroleum Corp. Ltd. had planned rights issues to raise as much as 220 billion rupees and 180 billion rupees, respectively, both backed by the federal government. Those will now be trimmed by as much as half, people familiar with the development said. They did not wish to be named as the plan is not public.

Prime Minister Narendra Modi’s government had set aside Rs 35,000 crore in the 2023-24 budget for “priority capital investments towards energy transition and net zero objectives, and energy security.” This included Rs 30,000 crore to be allocated to state-owned fuel retailers, with the rest earmarked for strategic petroleum reserves.

The government’s efforts to cut back come as it targets a fiscal deficit of 5.9% of GDP in the fiscal year that runs to the end of March, down from 6.4% last year. Though it’s likely to exceed its tax revenue projections, there will be shortfalls elsewhere, including in sums raised through the sale of shares in state-owned entities. So far, New Delhi has raised only Rs 10,050 crore from share sales, against a goal of Rs 51,000 crore.

Spokespeople at Indian Oil and Bharat Petroleum didn’t immediately reply to phone calls seeking comment, while there was no response to an email sent to the finance ministry.

The refiners have yet to receive formal notification from the government on the reduced rights issues, one of the people said. A separate person said the companies were sufficiently capitalized, and the reduction would not impact transition plans.


Source link