In 8 months, state refiners use 63% of Rs 89,000 cr capex target for FY 19
State-owned corporations Indian Oil, Bharat Petroleum and Hindustan Petroleum, as well as GAIL, are exhausting their capital expenditure budgets much faster than their upstream counterparts ONGC and Oil India in this financial year. The oil companies together spent about Rs 57,000 crore between April and November, 63% of their capex target of Rs 89,000 crore for 2018-19. State refiners are spending thousands of crores in expanding capacity and upgrading their facilities to produce low-emission fuel and improving their marketing infrastructure across the country to cater to the increasing demand for fuel. At 85% of capex target, refiner Bharat Petroleum was the fastest spender. Indian Oil, the country’s largest refiner and fuel retailer, spent 74% of its budget while HPCL, another refiner, used up 71% of its capital outlay. GAIL, the country’s largest gas marketer and pipeline operator, achieved 72% of its annual capex target, with most of its capital being deployed in laying a pipeline that would get natural gas to most of eastern India soon. ONGC and Oil India lagged peers in capital spending in the first eight months of the fiscal. ONGC, which has a capex outlay of Rs 32,000 crore for the year, spent only 54% till November. Its overseas arm, ONGC Videsh, spent 53% of its Rs 5,900 crore target. ONGC’s capex budget is usually much more than that of refiners such as Indian Oil and Bharat Petroleum, which have annual capex target of Rs 22,900 crore and Rs 7,400 crore, respectively. Oil India used up just 47% of its Rs 4,300-crore capex programme, figuring at the bottom of the spending table among oil firms. Higher investment in refining and marketing network is also needed to meet oil demand that has grown 2.5% this year.