IOC eval­u­ated OIL & GAIL for merger... but no de­ci­sion yet: San­jiv Singh

Resource Digest - - CONTENT -

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

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