Indian Oil earmarks Rs 22K cr capex for current fiscal year
Mumbai: Indian Oil Corporation (IOC) on Wednesday said it has lined up Rs 22,000-crore capex plan for the current fiscal year and will commission the Ennore-Manali LNG pipeline on schedule by the end of the year.
Sanjiv Singh, the chairman of the nation's largest oil marketing company, said the board has approved a capex plan of Rs 22,000 crore for FY19, of which around Rs 6,000 crore will be towards upgrading refineries to meet BS-VI emission norms.
Addressing reporters after the the AGM here, Singh also said the company is confident of commissioning the over Rs 4,000-crore, the 1,170-km-long pipeline linking its Ennore LNP terminal near Chennai to Manali in Himachal in 2018.
The over Rs 5,000-crore LNG terminal at Ennore will be commissioned as schedule by October, he added.
"More than 50 per cent work on the pipeline is already completed and we have tied up with all our target customers in Manali and most of them in Chennai region as well, Singh said.
On crude imports from Iran, Singh said there is no clarity how the sanctions will pan out from November 4 and accordingly they have tied up many national oil marketing companies to ensure that crude supplies are not disrupted.
"We don't procure crude from private suppliers. We have sounded out enough national oil companies for supplies to source oil depending on the impact of the US sanctions on Tehran," he said.
He also denied that IOC has reduced its intake from Iran as saying on a net-net basis there is no cut down.
"There could have been some fluctuations in some months but overall we are procuring as per our contracts," said Singh.
Giving a break-up of the capex plan, finance director AK Sharma said that around Rs 6,000 crore will go into refinery upgrades to meet the BS-VI emission norms, Rs 4,000 crore into marketing of which half will be used to procure new LPG cylinders, and around Rs 3,000 crore into new businesses like bio fuels, and Rs 1,000 crore into Paradeep petrochemicals expansion among others.
On fund raising plans, though Sharma said the company does not need any funds now, towards the end of the fiscal year, they will hit international bond markets along with a domestic debt market, as the firm has not tapped it for long.
According to the annual report presented to the shareholders on Wednesday, the company sought shareholders' approval for raising around Rs 20,000 crore through an NCD issue this year.
The company has around Rs 53,000 crore of debt as of June, of which 70 per cent are forex loans. The chairman also said, IOC, which was the first oil company to set up an electric vehicle charging station a few years ago in Nagpur, will increase its footprint more. But he did not offer more details.
On new businesses, especially after entering the city gas distribution arena on its own after the last month's auctions, he said IOC is very bullish about this segment and will invest over Rs 15,000 crore into this vertical over the next three years.
It can be noted that IOC has a joint venture with Adani group for city gas distribution and at the auctions last month it has on its own won rights to seven cities, including Coimbatore and Salem in Tamil Nadu and Guna in MP. Together with its JV partner Adani, it has marketing rights in nine more cities, including Allahabad.
He also said in the medium term, the company expects around 15 per cent profit to come from the gas business, and 15-20 per cent from petrochemicals vertical.
On the ethanol plant, Singh said the first 100 tonne per day plant in Panipat, with an investment of Rs 500 crore, will be commissioned over the next two years. The company has also taken land for two more biofuel plants in UP and Gujarat, he added.