Oil Ministry opposes NITI Aayog’s proposal to monetise core assets
The Petroleum & Natural Gas Ministry (P&NG Ministry) is opposed to monetisation of core assets proposed by government think tank NITI Aayog, sources told CNBC-TV18 on June 23. The ministry has instead identified non-core assets worth Rs 175 billion for monetisation from public sector undertakings (PSUs) such as GAIL, Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC), they added. Moneycontrol could not independently verify the report. The channel further reported that the ministry told NITI Aayog that monetising core assets which are integral to the oil marketing companies (OMCs) and for operation of GAIL is “not practical”. Of the Rs 175 billion non-core assets identified as alternative, Rs 100 billion worth assets are of IOC, Rs 50 billion are of GAIL and Rs 25 billion are of HPCL, it added. Notably, Finance Minister Nirmala Sitharaman had in her Union Budget 2021 speech on February 1 announced that oil and gas pipelines of GAIL, HPCL and IOC would be monetised to meet the Centre’s disinvestment target for the year. Earlier on June 20, commerce and industry ministry floated a draft cabinet note seeking inter-ministerial views on a proposal to allow up to 100 percent foreign investment under automatic route in oil and gas PSUs, which have an “in-principle” approval for disinvestment, sources said. The move, if approved by the union cabinet, would facilitate privatisation of Bharat Petroleum Corporation (BPCL), India’s second biggest oil refiner. The government is privatising BPCL and is selling its entire 52.98 per cent stake in the company. Sources said that as per the draft note, a new clause would be added in the FDI policy under the petroleum and natural gas sector.
India refiners’ May crude processing skids to 7-month low on gloomy demand
Indian refiners’ crude throughput slipped to its lowest level in seven months in May as a raging second wave of coronavirus drove a slump in domestic fuel demand and crude imports, government data showed on Tuesday. Refiners processed about 4.5 million barrels per day (bpd) or 18.97 million tonnes of oil last month, data from the country’s Ministry of Petroleum and Natural Gas showed. That was 7.7% below April levels but still 16% higher than a year earlier. “We’re expecting to see runs dip in June before ramping up towards the end of the year on a combination of seasonal demand strength post-monsoon and recovery from the impact of the second wave of the pandemic,” Natixis commodities strategist Joel Hancock said. The dip in refinery processing comes on the back of a 5.5% slip in India’s crude oil imports from April and May’s fuel demand in the third biggest oil consumer slumping to its lowest since August last year. Demand bottomed in May and will be ramping up steadily through the second half of this year and will rise sharply in the last quarter, Hancock said. Analysts noted that refiners remain optimistic over a rebound in oil demand as vaccinations have ticked up and COVID-19 cases eased this month. “We’ve seen this story play out in the U.S. and the UK, as the virus gets under control and vaccinations go up, you’re probably going to have a tremendous amount of pent up demand (in India) that’s going to be unleashed onto the market,” said Edward Moya, senior market analyst at OANDA. Indian refiners operated at an average rate of 92.37% of capacity in May, down from April’s 96.82%, the government data showed. Natural gas output rose 19.1% to 2.74 billion cubic metres, while crude oil production eased 6.2% to 580,000 bpd or 2.44 million tonnes, data showed.