IOC evaluated OIL & GAIL for merger... but no decision yet: Sanjiv Singh
The Indian petroleum industry is going through a phase wherein on the one side it is saddled with tax woes arising out of the goods and services tax and on the other is facing flak for rising petrol and diesel prices.
SANJIV SINGH, who took over as INDIAN OIL CORPORATION (IOC) CHAIRMAN earlier this year, speaks about these issues in an interview.
IS IOC’S CAPEX PLAN ON TRACK?
We have a capex plan of Rs 20,000 crore for this year spanning across different heads such as refineries, pipelines as well as marketing. In fact, the expenditure may be slightly above our original plan. We are implementing a lot of work for BS VI implementation at refineries. A lot of work is being done in the marketing field also, such as making Oisd-complaint terminals and modernising them. A lot of investment is also being made in LPG network enhancement.
HOW IS GST AFFECTING THE COMPANY AND DO YOU THINK ALL PETROLEUM PRODUCTS WILL COME UNDER GST?
While the exact numbers will be clearer only over time, we definitely estimate an impact of Rs 4,000 crore-6,000 crore annually. There have been some benefits as well. A lot of suppliers, vendors and contractors are passing on some GST benefits to us, although the amount is much smaller. Maybe with their numbers also getting clear over time, these figures will firm up as well. We have been talking to the ministry as well as the GST Council. In the long term, we hope that all petroleum products will come under the GST but till that happens, there will definitely be a negative impact on the oil industry.
WHAT HAS BEEN THE RESPONSE OF THE COUNCIL? It has not yet been indicated if it (all petroleum products under GST) will be considered but in principle, everyone agrees on this. We had also been approaching state governments and while they are concerned about their revenue being protected, an extra burden should also not come on us. We have been talking to states where our operations are high or we have refineries. The response has been okay but we are yet to see results. ARE YOU LOOKING TO BUY MORE LNG? Not only us, the country has plans for LNG. There is a lot of space for gasbased operations — whether we talk about utilisation of gas in our own refineries, fertiliser plants, factories, CGD or PNG. A lot of infrastructure is being built not only by IOC but by other companies as well. Significant investments are being made for LNG import terminals such as Dhamra and Ennore. To match that, companies are also booking LNG capacities and sourcing is being firmed up. Import capacity too has to be in line with what we can sell as well as consume internally. We are also planning to increase gas consumption within our refineries as well. The advantage with IOC is that we are a large anchor customer which allows us to establish a robust infrastructure for our internal consumption while also grows outwards to other customers. We have long-term contracts with Qatar, Gorgon and the USA and are buying from the spot market.
HAS IOC THOUGHT OF ACQUIRING ANY OTHER COMPANY IN LINE WITH PLANS FOR CREATING MEGA COMPANIES?
We have evaluated various options. We looked into Oil India and GAIL (India) . However, any such move has pros and cons. Though nothing has been firmed up, we have looked into a couple of opportunities. The process was done internally. We have to see which handshake makes value addition. It has to be a win-win for both the parties. Once we find that a particular business makes sense, we will probably come to what value we can offer to such mergers. That would be the stage when we would need external consultants to value the proposition. We have not decided on a time line for any merger.
HOW ARE YOUR OVERSEAS INVESTMENTS IN EXPLORATION DOING? Our major acquisitions last year were in Russian Taas and Vankor. Both are producing assets. Apart from that, we have gas coming from Canada as well as minor investments. These investments have starting giving dividends. Our share from Vankor is 2 MT and Tass is around 1.5 MT. We are open to more fields. It is a continuous process and we keep evaluating.
INDIANOIL CHAIRMAN SANJIV SINGH