Centre to infuse equity in 3 OMCs after they announce capex plans: Report

The center is looking to inject more shares and potentially increase the shareholding of three Oil Marketing Companies (OMCs), Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), after presenting their capital investment plans, a report from The Economic Times (ET) He said.

A government official was quoted in the report as saying that the center has allocated Rs 30,000 crore for capital support to these companies. The tools through which equity will be injected have not been finalized.

However, OMC Companies is concerned that the stock infusion could affect its share price, market valuation and market perception.

The three companies meet more than 90 percent of India’s oil demand. However, they face financial pressures. In the first half of the last financial year, these companies recorded a cumulative loss of Rs. 27,276 crore due to selling LPG and other cooking gases below cost price.

In India, LPG prices are regulated by the Centre.

Another official from one of the three global companies was quoted as saying, “We are not in a very good financial position at the moment. We were expecting some financial help from the government. But nothing has come so far.” ET.

In October last year, the center approved a one-off grant of Rs. 22,000 crore to OMCs to make up for losses. In January this year, these companies demanded another cash compensation of Rs 50,000 crore from the center for meeting their requirements for 2023-24.

Currently, the center owns 51.5 percent of the IOC stake. The rest is kept by the public. In BPCL, it owns 52.98 percent of the shares with 46.71 percent held by the public. In HPCL, the state-run Oil and Natural Gas Corporation (ONGC) owns 54.9 percent of the shares with the rest held by the public.

Center was also planning to sell its entire 52.98 percent stake in BPCL but the plan was canceled due to the Covid-19 pandemic and the Russia-Ukraine war.