The Centre is not in favour of divesting the government’s stake in oil marketing companies, said Oil Minister Hardeep Singh Puri on Tuesday.
In addition, the Centre will make efforts to bring petrol, diesel and natural gas under the ambit of Goods and Services Tax (GST), ETNow cited Puri as saying, as he assumed charge in the new cabinet on Tuesday.
Development around stake sale in OMCs comes after the government scrapped the Bharat Petroleum Corporation Ltd (BPCL) divestment process in 2022 as there was just one bidder left in the fray after the two others dropped out due to their inability to tie up funds for the acquisition.
The Indian firms are also in talks for term oil deal with Russia, he said.
Shares of BPCL, HPCL and IOCL spiked briefly following the minister’s comments to recover their losses for the day before paring their gains. BPCL, HPCL and IOCL were trading with gains of around 0.5 per cent, 0.8 per cent and 1.1 per cent respectively as of 1:20 pm.
Puri also hinted at increase in oil production from the 98/2 well.
“…Oil production from the 98/2 well will increase to 45,000 barrels per day very soon and gas production will also start soon,” he said.
He reiterated that the government was able to cross 15 per cent of ethanol blending and that 20 per cent target will be achieved by next year.
“As you know, the Prime Minister had set a target of 20% blending by 2030…On the basis of what I have seen and the basis of the work in progress, I am reasonably confident that the 20% blending target, which was brought forward from 2030 to 2025, will be completed by the 2025,” he said.
BPCL divestment
The government had laid emphasis on divestment plans of several state-run companies including BPCL in 2019. However, in May 2022, it formally withdrew its offer to sell its entire 52.98% stake in the oil company, saying majority of bidders have expressed their inability to participate in the current privatisation process due to prevailing conditions in the global energy market.
The privatisation was stalled after two out of three bidders walked out over issues like lack of clarity in fuel pricing. Mining mogul Anil Agarwal’s Vedanta, US venture funds Apollo Global Management Inc and I Squared Capital Advisors had expressed interest.
On Green Hydrogen plants
Puri also shared the plans and updated on the advancements in the field of green hydrogen, which the government couldn’t brief due to the Model Code of Conduct (MCC) in place for Lok sabha elections.
“It is a very big milestone to have a 10 MW Plant commissioned. Many Oil PSUs are in the process to issue tenders to supply green hydrogen. Green hydrogen station at Kochi has been commissioned for bus plying from Kochi airport. We are the first country in the world to employ green hydrogen buses, 11 in Delhi, 4 in Vadodara.
“The cost will keep coming down. It is a good start. The Green Hydrogen Refinery of 10 KTPA in Panipat, 5 KTPA Mathura, 10 KTPA in Paradip will be installed by the IOC soon. BPCL is in advanced stage to set up green field refineries and GAIL is also planning an ethane cracker unit for petrochemicals. Cauvery basin refinery is also coming up by IOCL in Chennai,” he said.
Petrol, Diesel under GST?
It is not the first time that Puri has laid emphasis on bringing petrol and diesel under the purview of GST. Even Finance Minister Nirmala Sitharaman, in November last year, noted that implementing this will benefit people.
Petrol and diesel are currently not included under the GST. Instead, fuels such as petrol, diesel, natural gas, and aviation turbine fuel (ATF) are subject to Value-Added Tax (VAT), central excise duty, and central sales tax. Each state sets its own rates for petrol and diesel.
However, Puri had earlier cited that for bringing the petrol and diesel under the GST, the states have to agree, for whom fuel and liquor are major revenue generators.
“If the states make the move, we are ready. We have been ready all along. That’s my understanding. It is another issue how to implement it. That question should be addressed to the finance minister,” the Petroleum and Natural Gas minister had said back in 2022.
Moreover, Sitharaman had said that Congress is adopting “double standards” on the said issue.
“Who are the people who are stopping petrol and diesel from being brought under GST? If Priyanka is in favor of bringing petrol and diesel under GST, she should ask every state government of Congress to agree to it in the GST Council,” the minister had said.
