India would cut oil refiners' equity contribution for the energy transition by half in FY24

India would cut oil refiners' equity contribution for the energy transition by half in FY24

India would cut oil refiners' equity contribution for the energy transition by half in FY24

The third-largest economy in Asia is anticipated to lower its budget deficit for this fiscal year to less than 1% of gross domestic product by the end of March. The country is currently experiencing a more than 40% shortfall in income from share sales in state-run firms. The main goal is to keep expenditure to 5.9% of total income.

As the federal government steps up its Wants to minimize budget deficit, India intends to half the amount of equity investment to $1.8 billion for 2023–2024 to assist three state oil refiners fund green energy projects, according to four official and industry sources.

The third-largest economy in Asia is anticipated to lower its budget deficit for this fiscal year to less than 1% of the national income by the end of March. The country is currently experiencing a more than 40% shortfall in income from share sales in state-run firms. The main goal is to keep expenditure to 5.9% of total income.

Indian Oil Corporation has set a goal of 2046, while state-run Bharat Petroleum Corporation and Hindustan Petroleum Corporation want to stop producing net carbon emissions from their activities by 2040.

To assist businesses in meeting the goal, equity assistance of Rs 300 billion ($3.61 billion) was announced in the budget for current fiscal year.

However, a representative of the business and the government said that the funding will be made available in a phased way and that the government would provide equity assistance totaling Rs 150 billion in 2023–2024.

The government has lowered the sum since refiners have a solid financial situation and do not need Rs 300 billion for capital investment this year, according to one of the sources.

All individuals with firsthand knowledge of the issue spoke on the condition of anonymity since the federal cabinet has not yet authorized the specifics.

In response to emails from Reuters requesting comment, India's oil ministry, finance ministry, and oil firms did not reply.

According to two industry insiders, BPCL and IOC want to reduce the amount of their scheduled rights offerings by half, to Rs 90 billion and Rs 110 billion, respectively.

According to one of the two industry sources, refiners would not need funding for energy transition projects right away, and their capital expenditures would only increase noticeably after two to three years.

According to a second government source, Oil and Natural Gas Corp., the parent company of HPCL, will see a preferential share offering that would enhance the government's ownership position in the firm by 1% to 1.5%.

The government has not previously revealed the specifics of its proposal to decrease its equity position by half, the amount of the scheduled rights issue of IOC and BPCL, or the preferential offering by ONGC.

Since the government sold ONGC its whole 51.1% ownership in HPCL in 2018, the government is unable to actively invest in the firm.

The government has taken into consideration a number of funding possibilities for HPCL, including an ONGC rights issue.

According to two industry insiders, the government has instructed oil firms to begin rights and preference issues by the middle of March in order to finish the process before the new fiscal year begins on April 1.