NEW DELHI: Finance ministry has halved the amount of equity infusion in state-owned fuel retailers to Rs 15,000 crore to support their investments in energy transition projects, and also has deferred the plans to purchase crude oil worth Rs 5,000 crore to fill strategic underground storages.
The ministry made this decision after considering the emerging trends in oil markets. “The plan for the purchase of crude oil worth Rs 5,000 crore for caverns at Mengaluru & Visakhapatnam has been recommended for deferral by the Department of Expenditure, Ministry of Finance. This recommendation takes into account the emerging trends in oil markets,” stated the finance ministry.
India, as the world’s third-largest oil importer and consumer, relies on imports for over 80% of its oil requirements. In order to safeguard against supply disruptions, the country has established strategic storage facilities at three locations in southern India. These facilities have the capacity to store over 5 million tons of oil, providing a crucial buffer to ensure a stable and secure oil supply.
In 2023, during the presentation of the national budget, finance minister Nirmala Sitharaman allocated Rs 30,000 crore for Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) to support the energy transition plans.
She also proposed Rs 5,000 crore for purchasing crude oil to fill strategic underground storages in Mangalore, Karnataka, and Visakhapatnam, Andhra Pradesh.
These storages were established by the government as a precautionary measure against potential supply disruptions. While other state-owned oil companies such as Oil and Natural Gas Corporation (ONGC) and GAIL (India) Ltd have also outlined substantial investments to achieve net-zero carbon emissions, the equity support was specifically directed to the three fuel retailers.
“Rs 30,000 crore capital support to OMCs (IOCL,BPCL, HPCL) for green energy and net zero initiatives: During Expenditure Finance Committee meeting held on November 30, 2023, it was decided maximum of Rs 15,000 crore could be provided for equity infusion into OMCs in FY 2023-24,” said the ministry.