Oil PSUs plan to restart projects worth Rs 43,000 crore
Executives at state oil companies, however, said they may face challenges in executing the projects. “Just spending money won’t get the job done. All our projects involve multiple contractors whose financial and execution ability have been hurt by the lockdown.
NEW DELHI: State oil companies plan to immediately restart more than 500 projects cumulatively worth about Rs 43,000 crore, government sources said. State firms are pushing hard to execute these projects in a situation where deep demand destruction has squeezed cash flow at refiners and increased debt. Low oil prices have sharply cut income at upstream firms and may force them to shelve some projects unviable at current prices. The Ministry of Petroleum and Natural Gas wants to capitalise on the government’s move to partly ease the ongoing nationwide lockdown and allow limited economic activity, the sources said. State oil companies have assessed that 511 projects can be started immediately, a government official said. These projects would require expenditure of Rs 42,790 crore in the current fiscal year, he added. “These projects involving refinery, E&P, marketing infrastructure, pipelines and city gas distribution are expected to generate Rs 2,210 crore pay-out in the first month, out of which Rs 266 crore would be paid to labour,” the official said. These projects are in line with the home ministry’s guidelines and have been assessed on manpower availability and restrictions by municipalities. Executives at state oil companies, however, said they may face challenges in executing the projects. “Just spending money won’t get the job done. All our projects involve multiple contractors whose financial and execution ability have been hurt by the lockdown. Until they finish a job, we can’t pay them,” said an executive at a state oil firm. The projects include 196 by Indian Oil Corp, 168 of Bharat Petroleum Corp Ltd, 57 of Hindustan Petroleum Corp Ltd, 32 of Gail India Ltd and 26 of Oil and Natural Gas Corp Ltd
Most oil projects are inherently complex and involve global supply chains of expertise and equipment. With lockdowns currently in place across several countries, most local oil and gas projects are likely to be delayed this year.