The combined capital expenditure of Indian oil PSUs rose 30 percent in the current fiscal till November, amid an increased number of projects taken up by the companies to meet rising energy demand of the country.
In the April to November 2024 period, the oil PSUs spent Rs 97,667 crore from the annual target of Rs 1,06,401 crore. This is compared to capex of Rs 75,418 crore in the April- November period a year ago.
The Indian oil PSUs include Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Oil and Natural Gas Corporation Limited (ONGC), GAIL (India) Limited, among others.
The oil PSUs had exceeded the capex target of Rs 1.06 lakh crore in the financial year 2023-24 (FY24). The companies spent a total of Rs 1.28 lakh crore in the previous fiscal, 12 percent higher than the targeted amount.
Increased spending
The higher spending is on the account of newer projects being taken by the companies as India’s energy demand is on the rise.
The state-run oil marketing companies (OMCs) including IOCL, BPCL and HPCL have been working to set up new refineries while also increase capacity of the existing ones, as India aims to increase its refining capacity to 450 million metric tonnes per annum (MMTPA) by 2030 from around 250 MMTPA currently.
Bharat Petroleum, which currently operates three refineries in Mumbai, Kochi, and Bina in Madhya Pradesh, has announced setting up a new greenfield refinery in Andhra Pradesh. BPCL and ONGC are also jointly setting up another refinery, according to media reports.
In 2023, state-run HPCL announced setting up of a new oil refinery in Rajasthan’s Barmer with a capacity of nine MMTPA, which is expected to be commissioned in January 2025.Meanwhile, IOCL, which has the largest refining capacity in the country, is also expanding the capacity of its refinery in Panipat, Haryana, to 25 MMTPA, from 15 MMTPA.
Gas companies including GAIL (India) are working to improve gas infrastructure by laying down pipelines across the country and increasing capacity of its LNG (liquified natural gas) terminals. Under the government’s initiative of National Gas Grid, aimed at ensuring easy availability of natural gas across all regions in the country, the companies have built about 17,000 km long gas pipeline network. An additional 15,500 km pipelines are yet to be developed to complete the National Gas Grid.
As India progresses to achieve its net-zero emissions target by 2070, the oil companies are also looking at green energy projects including compressed biogas (CBG) plants, green hydrogen, among others.
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