Petrol-Diesel Price: Central government supported half the budget of oil companies, work on strategic oil storage postponed
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The central government has given a big blow to oil distribution companies in the last week of the month. The government has halved the amount of equity investment to be made in public sector fuel retailers to Rs 15,000 crore to support projects related to energy transition i.e. green energy. The Finance Ministry gave this information. While presenting the general budget for the financial year 2023-24 on February 1 last year, Finance Minister Nirmala Sitharaman, Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) had announced an equity investment of Rs 30,000 crore. This investment was to be made to support the investments made by these three companies in energy transition plans. Along with this, the Finance Minister had also proposed Rs 5,000 crore for purchasing crude oil to fill the strategic underground storage in Mangalore in Karnataka and Visakhapatnam in Andhra Pradesh. This was to be used to protect against any supply disruption.
Sports postponed due to oil markets
The Finance Ministry said that in view of the emerging trends in the oil markets, that plan has also been postponed. Other state-run oil companies such as ONGC and GAIL (India) Limited have also invested billions of dollars to achieve net zero carbon emissions. However, equity support was limited to three fuel retailers. These companies had suffered huge losses in 2022 due to selling petroleum products at prices below cost. Giving details of the implementation of the budget announcements on the social media platform ‘X’, the Finance Ministry informed about halving of equity support and deferring filling of strategic reserves.
Government gave Rs 30 thousand crore for green energy
The Ministry of Petroleum and Natural Gas has provided Rs 35,000 crore in the Budget for FY 2023-34 for priority capital investment for energy transition and net zero carbon emission objectives and energy security, the government said on social media. Of this, Rs 30,000 crore was for capital support to oil marketing companies IOC, BPCL and HPCL for green energy and net zero carbon emission initiatives. The remaining were for the purchase of crude oil for strategic underground storage areas in Mangalore and Visakhapatnam.
Details not received from Finance Ministry
During the meeting of the Expenditure Finance Committee held on November 30, 2023, it was decided that a maximum of Rs 15,000 crore can be provided for equity investment in oil marketing companies in the financial year 2023-24. However, the Finance Ministry did not give details of the reasons for the decision. Industry sources said that this decision may be related to the increase in profit of the three companies in the current financial year.
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