With private investments still languishing, the Narendra Modi-led government is set to give a strong push to a slew of big-ticket projects of public-sector companies, especially those in the oil and gas sector. The government has given stern directions to ONGC, IOC, GAIL (India), BPCL and HPCL, among others, to complete as many as 21 of their pending projects, entailing capital investments of R60,000 crore, latest by the end of the financial year.
The move comes at a time when the finance ministry, in its mid-year economic analysis released recently, said given Corporate India’s weakness, the government must make a conscious effort to push public investments, as these could help “crowd in” private investments.
“There is a need to ensure continuous availability of petroleum products at competitive prices to support economic growth. This is why there is an aggressive push to complete projects taken up by the oil companies,” a top official at the petroleum ministry, who did not wish to be named, told FE.
Of the projects being given fresh momentum, the most important is IOC’s 15 million tonnes per annum greenfield refinery at Paradip in Odisha being set up at a cost of R34,555 crore. The refinery, which was to be commissioned during June-December 2014, has seen its cost going up by 16% because of delays. The unit will be fully ready in FY16.
According to the petroleum ministry, out of the total Plan outlay for capital expenditure of Rs 80,635 crore in 2014-15, an expenditure of Rs 33,814 crore has been made during April-October 2014. “Total 14 major projects worth Rs 40,659 crore including eight projects in upstream oil and gas sector has been compeleted by October 30. Another 21 projects worth about Rs 60,000 crore are to be completed by March 30,” the official added.
Country’s largest explorer ONGC have been asked to complete about Rs 9,457 crore projects within this time frame. This is in addition to projects worth Rs 26,518 crore ONGC has completed till the second quarter of FY15.
Many of ONGC’s development of small and cluster fields have been delayed. For instance, the company board on March 25, 2010 approved development of cluster-7 fields in Mumbai offshore at a cost of Rs 4,550.40 crore to be completed by March 2013. This project has has been delayed by 21 months (or nearly two years) and now expected to be completed only by December 2014 and resulting 46% increase in expenditure. The revised project cost is estimated at Rs 6,638.94 crore. This is one of the projects petroleum ministry has added to the list of projects to be completed by March 2015.
Other projects to be fast tracked includes GAIL’s petrochemical complex-II at Vijaipur and Pata for Rs 8230 crore and BPCL’s Rs 1419 crore project for replacement of old crude and vacuum distillation units by CDU-4 at Mumbai refinery.