Rs 30k crore ‘support’ to let oil companies cushion losses
NEW DELHI: The government proposes to give Rs 30,000 crore to state-run oil refiner-cum-fuel retailers in 2023-24 as “capital support”, which, officials said, would be spent on building low-carbon infrastructure but industry analysts described as an indirect subsidy to their losses on fuel sales.
Officials explained the budget provision saying the companies have to invest in technology to reduce their carbon footprint, including shifting to green hydrogen in their refineries and expand blending facility for producing 20% ethanol blending. The money is meant to support transition to low-carbon processes. But analysts said the companies are cash-rich in spite of current losses on fuel sales. They also have healthy debt:equity ratio that they can leverage to raise money from the market. So the capital support is an indirect way to subsidise their current losses, they said. ICRA’s Sabyasachi Majumdar put things in perspective by pitching the Rs 30,000 crore allocation against the Rs 50,000 crore sought by the companies as compensation for fuel losses. It is pertinent to note that domestic LPG prices are controlled by the government but petrol and diesel prices are officially deregulated.
