The government had announced its capital support plans for these state-run refiners last February in the FY24 Union budget. At the time, these companies were facing a difficult patch and were demanding compensation for the heavy losses they had suffered in the first two quarters of 2022-23 for not increasing retail fuel prices in line with rising international rates.
Since pump prices are deregulated in the country, the government didn’t agree to the compensation but allocated a capital support of ₹30,000 crore in the budget, which could be used by the companies for their green transition projects, the people cited above said requesting anonymity.
To start with, the companies were not too keen on equity infusion by the government as, like debt, equity also needs to be serviced, several company executives told ET previously. Second, they could easily raise long-term debt from the market at an acceptable rate and fund their green projects, which will stretch over a decade or more, they said.
However, with the three state refiners posting record-high profits in the fiscal first half, the conversation in the finance ministry changed, triggering multiple reports that the government is reconsidering its investment plans.
The people cited above said government officials have informed executives at these refiners that the proposed investments could be halved.
