State-run oil companies have spent just a fifth of annual capital expenditure target

New Delhi: State-run oil companies have spent just a fifth of annual capital expenditure target of nearly Rs 1 lakh crore in the first four months of the year as the pandemic slowed down project execution and forced some firms to cut capex.
Of the Rs 98,522 crore targeted for 2020-21, oil companies spent Rs 19,569 crore in the April-July period, according to official data.

The government is pushing state-run firms to accelerate capital spending in a bid to revive the economy, which is facing a contraction due to Covid-19 and an extended lockdown. Finance minister Nirmala Sitharaman has been regularly monitoring the spending by state companies.

Oil and gas companies, the biggest spenders among state-run companies, are facing execution challenges ranging from slow return of migrant workers to project sites to mobility restrictions and supply chain issues constraining the availability of experts, equipment and materials.

ONGC Videsh, the Oil and Natural Gas Corporation (ONGC) arm which invests in overseas projects, spent at the fastest clip among state-run oil companies. It used up 28% of its planned spending of Rs 7,235 crore in April-July.

Bharat Petroleum Corporation Ltd (BPCL), which is being privatised by the government, has been the slowest in its capex execution. In the first four months of the fiscal year, it spent just about 14% of its annual target of Rs 9,000 crore for the year. BPCL has cut its planned capex for the year to Rs 8,000 crore.

ONGC, the largest spender among state-run oil companies, has cut its capex target by 15%. It has so far spent 22% of its planned capex of Rs 32,500 crore for the year.

Hindustan Petroleum Corporation Ltd (HPCL) is the second from the bottom on the spending chart. It exhausted just 16% of its annual target of Rs 11,500 in April-July. Activity at HPCL’s project sites picked up following the easing of lockdown restrictions but not all workers had returned to work yet, HPCL chairman MK Surana said earlier this month.

Indian Oil Corporation, the nation’s largest refiner and fossil fuel retailer, spent 18% of its target of Rs 26,233 crore in the first four months while GAIL, the operator of largest gas pipeline network in the country, exhausted a fifth of its allocation.