New Delhi, Jan 27 (KNN) In a recent development, the Indian government has cut the allocation for equity infusion in energy transition projects for major oil companies. 

The Finance Ministry announced a significant reduction by half, bringing the allocation down to Rs 15,000 crore for Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd.

The decision to slash the equity support was disclosed along with the deferment of plans to fill strategic oil reserves. 

Finance Minister Nirmala Sitharaman had initially proposed an equity infusion of Rs 30,000 crore in the Union Budget for 2023-24 to support the energy transition plans of the three oil marketing companies. 

This move was aimed at aiding the companies in their efforts to adapt to cleaner and more sustainable energy practices.

Additionally, the Finance Minister had earmarked Rs 5,000 crore for purchasing crude oil to fill strategic underground coastal storages at Mangaluru in Karnataka and Visakhapatnam in Andhra Pradesh. 

The intention behind these reserves was to create a buffer against potential disruptions in crude supply. 

However, the Finance Ministry cited emerging trends in the oil markets as the reason for deferring this plan.

The equity support was initially provided to compensate the oil companies for the losses incurred when they were instructed not to increase prices of petrol, diesel, and LPG to shield consumers during a period of surging global crude prices, triggered by the Russia-Ukraine war.

This decision reflects a recalibration of government priorities in response to changing global dynamics, with a focus on balancing economic considerations and the imperative to transition towards cleaner energy sources.

(KNN Bureau)