OMCs to get half of budget provision for green energy, net zero initiatives
- The government has halved the amount of capital support given to state-owned oil marketing companies.
Key Highlights
- The support was officially aimed at beefing up investments in energy transition projects.
- The provision had been made to compensate three fuel retailers who had suffered huge losses in 2022.
- The losses occurred when they held retail petrol and diesel prices
- Despite a spike in crude oil prices following Russia’s invasion of Ukraine.
Budgetary Provisions for Capital Support
- The Union Budget for FY24 made a provision of ₹30,000 crore of capital support
- To Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd. (BPCL), and Hindustan Petroleum Corporation Ltd. (HPCL).
- The Finance Minister had proposed ₹5,000 crore for buying crude oil to fill strategic underground storages
- At Mangaluru in Karnataka and Visakhapatnam in Andhra Pradesh.
- The equity support by the Finance Ministry has been halved to ₹15,000 crore and the plan for filling strategic reserves has been deferred.
- The decision is the background of the meeting of the Expenditure Finance Committee in November, 2023.
- Based on the recommendations of the EFC, approval of the CCEA (Cabinet Committee on Economic Affairs) is being sought.
Equity Infusion to Green Energy
- The Equity Infusion to OMC’s in 2022-23 will be utilised for green energy initiatives.
- The green energy initiatives have targets to achieve energy transition, net zero, and energy security objectives.
- There will be the revised capital infusion plan by March 31, 2024.
Prelims Takeaway
- Cabinet Committee on Economic Affairs
- Expenditure Finance Committee