State-run Oil Cos Use 90% Capex on Govt Nudge
OVL, Oil India and IndianOil have exceeded annual targets already
State oil firms have spent 90% of this fiscal’s capital expenditure in the first nine months, with ONGC Videsh, Oil India and Indian Oil Corporation having exceeded their annual targets already.
The government has nudged state firms to invest big and quick to boost jobs and economic growth in the country as private investment has languished. Relentless pressure from the government to pay higher dividend or to return unused cash to shareholders has also accelerated state firms investment in projects, industry executives said.
Between April and December, they spent `78,000 crore on drilling new oil wells, building processing platforms, expanding refining and storage capacity and fuel supply networks. The target for the full year is `88,000 crore.
ONGC Videsh, the overseas arm of state-run explorer Oil and Natural Gas Corporation, has spent `16,519 crore, more than its annual target of `14,843 crore as it purchased stake in some fields and contributed its share of capex in others.
Oil India’s capital spending of `9,300 crore is more than double that of its annual target. With an investment of `15,423 crore, Indian Oil has just surpassed its annual target in nine months.
ONGC, the country’s big gest oil producer, has, however, been relatively slow in making the planned expenditure. It has spent about `19,000 crore, against an annual target of `29,000 crore.ONGC and Oil India are under tremendous government pressure to raise the country’s crude oil output, which has been declining for years, and reduce dependence on imports. The country’s crude oil production has fallen 3.6% year-on-year so far in 2016-17.
Refiner Hindustan Petroleum has spent just about half of its `6,900 crore target while Bharat Petroleum has invested `12,000 crore, `1,000 crore short of its annual target. GAIL, the country’s largest natural gas pipeline operator that faces long dela ys in some of its projects, has invested nearly two-thirds of its annual planned capex in nine months. It had missed its capex target by half in the last fiscal year.
Petroleum products consumption has grown 8.8% so far this fiscal year aided by lower prices and faster economic expansion in the country. To cater to the growing fuel demand, state firms have been adding refining capacity and building deeper networks of supplies across the country.