ONGC, IOC and other oil PSUs will invest about Rs. 1200 billion in the coming fiscal starting April in oil and gas exploration, refineries, petrochemicals and laying pipelines to meet the needs of the world's fastest-growing energy consuming nation.
The investment proposed in 2024-25 is 5 per cent higher than Rs. 1120 billion spent by the State-owned oil firms in the current fiscal year that ends on March 31, according to Budget 2024-25 documents.
Oil and Natural Gas Corp (ONGC) has a planned capital spending of Rs. 308 billion in the next financial year. This expenditure in finding new reserves of oil and gas and bringing to production discoveries it has already made, is slightly higher than Rs. 305 billion capex in 2023-24 fiscal (April 2023 to March 2024). It is developing discoveries on both east and west coasts of the country.
The top oil producer's overseas arm, ONGC Videsh Ltd (OVL) will invest 68 per cent more at Rs. 55.80 billion in 2024-25 in oil and gas operations abroad when compared with the previous fiscal.
Indian Oil Corp (IOC), the country's top oil refiner, will be the top spender with an investment outlay of Rs. 309.10 billion, with the bulk of it in expansion and upgrade of its seven refineries that produce fuel. This outlay also includes Rs. 32.99 billion in the petrochemical business and another Rs. 2.3648 billion in the small oil and gas exploration portfolio it has.
The investment planned by IOC is less than Rs. 312.54 billion spending in the current 2023-24 fiscal.
Bharat Petroleum Corp Ltd (BPCL) has proposed a 30 per cent higher capital spending at Rs. 130 billion, two-thirds of which will be in its core refining business.
Gas utility GAIL India Ltd will see its planned investment decline to over Rs. 80 billion in 2024-25 from Rs. 97.50 billion in the previous fiscal as most of its pipeline grid expansion projects are nearing completion.
Hindustan Petroleum Corp Ltd (HPCL), a subsidiary of ONGC, will invest Rs. 125 billion in FY25, marginally higher than Rs. 120 billion in the previous year.
Oil India Ltd, the nation's second-largest oil producer, will invest Rs. 68.80 billion next year as compared to Rs. 56.48 billion in the current fiscal.
In her interim budget for 2024-25 ahead of general elections, Finance Minister Nirmala Sitharaman had on February 1 put off capital support to oil marketing companies — IOC, BPCL and HPCL — to the next fiscal year.
She, while presenting the annual Budget for 2023-24 on February 1 last year, announced equity infusion of Rs. 300 billion in IOC, BPCL and HPCL to support their energy transition plans. Alongside, she had also proposed Rs. 50 billion 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 showed no allocation for equity infusion in the current fiscal. The Rs. 150 billion has now been earmarked for 2024-25 fiscal (April 2024 to March 2025).
The budget documents did not provide any funds either in the current fiscal or the next for filling the strategic reserves.
While other state-owned oil companies such as 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.
