India Scraps Funding for Refiners’ Decarbonization in 2024/2025

As India is looking to reduce its budget deficit, the government doesn’t plan to allocate any funds in the 2024/2025 budget to help some of its biggest state oil refiners meet their net-zero operations targets.

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 planned to help fund the firms’ net-zero and energy transition goals. 

The government was 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 was planning to support their goals to achieve net-zero operational emissions in the 2040s. 

However, such funds are not earmarked in the 2024/2025 budget proposal unveiled this week.

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.     

However, due to budget constraints, India was planning to halve the equity support to the three state-held oil refiners, Reuters reported in early January, quoting industry and government sources. 

Indian Oil, Bharat Petroleum, and Hindustan Petroleum 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.   

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

By Charles Kennedy for Oilprice.com

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