COVID-19 shaves off one-fifth capex of ONGC in FY21
ONGC had budgeted Rs 32,502 crore of capital spending in the fiscal from April 2020 to March 2021 but ended up spending only Rs 26,441 crore
New Delhi: Oil and gas producer ONGC spent about one-fifth less than its budget Capex in 2020-21 fiscal after COVID-19 related restrictions delayed projects but fuel marketers such as IOC exceeded targeted capital spending, a government report showed.
Oil and Natural Gas Corporation (ONGC) had budgeted Rs 32,502 crore of capital spending in the fiscal from April 2020 to March 2021 but ended up spending only Rs 26,441 crore, according to the report of the oil ministry’s Petroleum Planning and Analysis Cell (PPAC).
A company official said the lower than targeted Capex was because of project implementations getting delayed following the disruption caused to the supply chain and labour movement by COVID restrictions.
Oil and gas exploration and production projects typically involve the supply of equipment from overseas suppliers. Also, some facilities like rigs are operated by foreign crews.
Slippery slope
Lockdowns in several parts of the world, including India, restricted the movement of labour as well as disrupted supply chains.
ONGC’s overseas arm OVL too had a lower capital spending of Rs 5,351 crore in 2020-21 fiscal as compared to the targeted Rs 7,235 crore. But, other downstream companies exceeded their capital spending targets by a wide margin.
Indian Oil Corporation (IOC), the nation’s largest fuel retailer, had budgeted Rs 26,233 crore Capex, but ended up spending Rs 27,195 crore, the PPAC report showed.
Hindustan Petroleum Corporation Ltd (HPCL), a unit of ONGC, spent Rs 14,036 crore against its target of Rs 11,500 crore. Similarly, Bharat Petroleum Corporation Ltd (BPCL) ended up spending Rs 10,697 crore against the budgeted Rs 9,000 crore.
Gas utility GAIL (India) Ltd exceeded its target of Rs 5,412 crore Capex by about Rs 150 crore.
The government had banked on capital spending of the public sector companies for economic recovery post disruptions caused by the pandemic. Such spending drives economic activity by creating demand for different sectors such as steel and creating employment.
Oil India Ltd, the nation’s second-largest state explorer, spent Rs 12,802 crore in FY21 as against the budgeted Rs 3,877 crore. This was largely due to its acquisition of a majority stake in Numaligarh Refinery Ltd from privatisation-bound BPCL.