State-owned oil companies are struggling to keep up the momentum over their planned capital expenditure for the current fiscal as the Covid-19 pandemic has slowed down project execution and pruned spending.
All public sector oil companies put together have spent just about 20 per cent of their Rs 1 lakh crore capex planned for FY21 in the first four months of current fiscal. As per government data, the capex of oil companies in April-July period stands at Rs 19,569 crore, much slower than previous years.
The spending pattern goes against the wishes of the Finance Ministry that wants state-run companies to become engines of growth during the pandemic by stepping up their investment to kickstart overall economic activity in the country. In fact, in her meetings with PSU chiefs, Finance Minister Nirmala Sitharaman has stressed that PSUs should complete 50 per cent of their planned capex for the year by September.
Spending by oil companies are closely monitored as they are the biggest spenders among PSUs. But a host of issues have prevented their spending this year. The general conditions in the oil market has been weak, pushing back project implementation. Moreover, several entities are facing labour shortages as well due to their migration during Covid-19 outbreak.
Of the total spending by the oil PSUs, ONGC's overseas investment arm ONGC Videsh Ltd has spent the fastest, completing close to 30 per cent of its annual planned spend of about Rs 7,000 crore.
Privatisation-bound Bharat Petroleum Corporation Ltd (BPCL) has been the slowest in spending reaching just 14 per cent of annual capex of Rs 9,000 crore by July.
IOC has spent just about 18 per cent of its over Rs 26,000 crore capex while ONGC has cut its capex target for this year and so far spent just about 22 per cent of over Rs 32,000 crore spending plan.
HPCL and GAIL have just about managed to reach close to spending a fifth of their planned amounts by July this year.