State-run oil companies have exceeded their capital expenditure targets set for the current financial year.
As of February 2017, the 11 state-run oil firms spent more than the target of Rs 87,603 crore.
According to the data released by the Petroleum Planning and Analysis Cell (PPAC), in the April-February period these companies spent Rs 91,781 crore as capex. The amount spent has been the highest since 2014-15.
Of the 11 companies, ONGC Videsh Ltd, Oil India Ltd, Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL), Numaligarh Refinery Ltd and Balmer Lawrie Co. Ltd are those that have exceeded their annual capital expenditure targets.
“There is a definite government push for PSU oil companies to ramp up investment while there is a slowdown in private sector investment. As such, robust demand and a series of policy measures have provided excellent investment opportunities in oil sector segments like exploration and production, pipelines, city gas distribution and in refineries for the planned upgrade to BS-6 norms,” said Debasish Mishra, partner at Deloitte Touche Tohmatsu India.
However, it remains to be seen if other state-run companies in sectors such as infrastructure, roads and power follow the trend set up the oil firms. Most analysts remain sceptical whether the state push to step up capital expenditure will nudge the private sector into doing so because the latter has idle capacity. According to the Reserve Bank of India (RBI) data, at the aggregate level, capacity utilisation stood at 72.4 per cent for the September 2016 quarter, marginally lower than in the previous quarter, but a little higher than in the quarter a year earlier.