Moneycontrol | Oil Minister clears air on Rs 35,000 crore energy transition budget allocation

Feb 09,2023

The Rs 35,000 crore earmarked in the Union Budget this year for energy transition and energy security is to be spent on the green energy capital expenditure of oil companies and to augment India’s strategic petroleum reserves, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has clarified.

In her budget speech on February 1, Finance Minister Nirmala Sitharaman said that the budget has provided Rs 35,000 crore for priority capital investments  by the Ministry of Petroleum and Natural Gas towards energy transition and net zero objectives, as well as energy security.

The announcement triggered speculation that this amount may include the compensation to Oil Marketing Companies (OMCs) for the losses they incurred due to a price freeze earlier. Another item confusing industry players was if the Rs 30,000 crore mentioned as capital support for the ministry in the Budget was part of it or not.

In an interview with Moneycontrol, Puri cleared the air on the matter, stating that the Rs 35,000 crore includes Rs 30,000 crore as capital support, and that is not the amount that the government is giving to OMCs to make up for earlier losses.

“Out of that Rs 35,000 crore, I think Rs 5,000 crore is earmarked to augment the Strategic Petroleum Reserve. The other one, I think, yes, the finance minister is right. It is capital expenditure,” Puri said in an interview with Moneycontrol on the sidelines of the India Energy Week on Tuesday.

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The minister also clarified that this is a separate budgetary allocation and does not include the earlier compensation given to oil marketing companies to cover their losses for under-recoveries.

Last week, finance secretary TV Somanathan, in response to a query from Moneycontrol, said, the funds earmarked would be utilised to meet the retro-fitting needs of refineries and other units as they upgrade to meet emission and other pollution norms and targets, as well as to augment the country’s strategic petroleum reserves.

In his interview on Tuesday, Puri added, “It is also, in a way, an infusion into oil companies and green energy transition, because they have been taking a beating on so many things. At the end of the day, it’s kind of money availability, but it is capital expenditure for the green energy transition.”