Oil and Natural Gas Corporation Public sector petroleum companies including ONGC and Indian Oil Corporation (IOC) will invest around Rs 1.2 lakh crore in the new financial year starting from April. Public sector petroleum companies will make this investment mainly in oil and gas exploration, refinery, petrochemicals and pipeline business, which will help in meeting the energy needs of the country. According to the budget document 2024-25, the proposed investment in 2024-25 will be about five per cent higher than the current fiscal ending March 31. The investment of petroleum companies in 2023-24 is estimated to be Rs 1.12 lakh crore.
These petroleum companies will invest
ONGC plans capital expenditure of Rs 30,800 crore in the next financial year. The company will make this investment on finding new reserves of oil and gas and bringing earlier discoveries into production. This is slightly higher than the capital expenditure of Rs 30,500 crore for 2023-24. The company is developing discoveries on both the east and west coasts of the country. Similarly, ONGC’s overseas unit ONGC Videsh Ltd. (OVL) will invest Rs 5,580 crore in 2024-25. This is 68 percent more than the current financial year. Indian Oil Corporation (IOC), the country’s largest oil refinery company, will be the biggest spender with an investment outlay of Rs 30,910 crore.
IOC’s emphasis on refinery
IOC said this investment will mainly be on expansion and upgrading of its seven refineries producing fuel. Of this amount, the company will spend Rs 3,299 crore on petrochemical business and Rs 236.48 crore on small oil and gas exploration portfolio. However, IOC’s investment is slightly less than the expenditure of Rs 31,254 crore for 2023-24. Bharat Petroleum Corporation Limited (BPCL) has proposed 30 percent more capital expenditure in 2024-25, i.e. Rs 13,000 crore. Of this, the company will spend two-thirds on its main refinery business. The planned investment of gas company GAIL India Limited is estimated to fall to a little over Rs 8,000 crore in 2024-25. The company’s investment in the last financial year is estimated to be Rs 9,750 crore. The main reason for the company’s investment decline is that most of its pipeline grid expansion projects are nearing completion.
HPCL also made investment plan
ONGC’s subsidiary Hindustan Petroleum Corporation Limited (HPCL) will invest Rs 12,500 crore in the financial year 2024-25, which is slightly more than the figure of Rs 12,000 crore in the last financial year. The country’s second largest oil producing company Oil India Limited (OIL) will invest Rs 6,880 crore next year compared to Rs 5,648 crore in the current financial year. In the interim budget for 2024-25 presented on February 1, ahead of the general elections, Finance Minister Nirmala Sitharaman has proposed to defer capital support to petroleum marketing companies – IOC, BPCL and HPCL till the next financial year. While presenting the annual budget for 2023-24, he had announced equity infusion of Rs 30,000 crore to IOC, BPCL and HPCL to support their energy transition plans.
No allocation for equity investments
Along with this, he had also proposed Rs 5,000 crore to buy crude oil to fill the strategic underground storage in Mangalore in Karnataka and Visakhapatnam in Andhra Pradesh. In November last year, the Finance Ministry had halved the equity support. In the interim budget for 2024-25 presented in the Lok Sabha on Thursday, Sitharaman did not show any allocation for equity investment in the current financial year. Now Rs 15,000 crore has been earmarked for petroleum companies in 2024-25. According to the budget documents, no amount has been allocated for the current financial year or the next financial year to replenish the strategic reserves. Industry sources said the decision could be linked to the increase in profitability of the three companies in the current financial year. These companies have partially compensated the losses for the financial year 2022-23. All three are making good profits this year as the retail selling price has remained unchanged for 21 months despite falling crude oil prices.
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