India Slashes Financial Support for State Oil Refiners' Green Goals

In a bid to reduce government deficit, India plans to halve the equity support to three state-held oil refiners to help them fund measures to meet their net-zero operations targets, Reuters reported exclusively on Friday, quoting industry and government sources. 

The three state-owned refiners, Indian Oil Corp, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, were set to receive the equivalent of $3.6 billion, or 300 billion Indian rupees, in equity support for the fiscal year 2023/2024 to reach their goals to have net-zero emissions from operations in the 2040s.   

But now, facing rising fiscal deficit, India will allocate half of the planned support, $1.8 billion, or 150 billion rupees, for the current fiscal year ending March 31, 2024, according to Reuters’ sources. 

In the middle of last year, India’s government asked some of the biggest state oil refiners to launch rights issues with which the authorities plan to help fund the firms’ net-zero and energy transition goals. 

The government will be seeking equity in Indian Oil Corp and Bharat Petroleum Corporation Limited (BPCL) via rights issues, and has asked Hindustan Petroleum Corporation Limited (HPCL) to issue preferential shares to the government. In exchange for the equity in the refiners, India plans to support their goals to achieve net-zero operational emissions in the 2040s. 

Indian Oil, BPCL, and HPCL are looking to invest a combined up to $48.8 billion (4 trillion Indian rupees) to reach their net zero-emissions goals by 2040.     

Indian Oil Corp, the country’s top refiner and fuel retailer, said in 2023 it would consolidate all its green energy businesses into a wholly-owned unit with the purpose of boosting its clean energy division.  

India, the world’s third-largest carbon emitter after China and the U.S., has a net-zero target set for 2070, twenty years later than the 2050 target of most developed economies including the U.S.   

By Tsvetana Paraskova for Oilprice.com

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