State-run oil marketing companies (OMCs) will increase their capital expenditure (capex) by 4.5% year-on-year (y-o-y) to approximately ₹69,000 crore in the financial year 2025-26 (FY26). These OMCs account for nearly 90% of India’s total auto and jet fuel sales, making their investments critical to the energy sector.
Capex Plans for FY25 and FY26
In the current financial year (FY25), Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) plan to invest ₹66,000 crore. They will make this investment collectively. As per investor calls, IOCL, the country’s largest fuel retailer, expects to allocate ₹35,000 crore for capex in FY26. Meanwhile, BPCL and HPCL will invest approximately ₹18,500-19,000 crore and ₹13,000-15,000 crore, respectively.
For FY25, IOCL is set to maintain its capex at ₹35,000 crore. BPCL plans to invest ₹16,000 crore, while HPCL aims to allocate ₹13,000-15,000 crore.
Refining and Petrochemicals Drive Growth
According to a recent JM Financial report, OMCs will sustain a strong capex run-rate. This growth will be primarily driven by refining and petrochemical projects. Management projections suggest that India’s oil demand will grow at a compound annual growth rate (CAGR) of 4-5% over the next 10-15 years. This trend necessitates continued investments in refining capacity.
Higher Budget Allocation for OMCs in FY26
The Union Budget for FY26 reflects the government’s focus on increasing investments in India’s energy sector. The budget allocation for the three OMCs under public enterprises stands at ₹65,293.85 crore. This marks a 15.75% increase from the budget estimate (BE) for FY25. It also reflects a 6.47% rise from the revised estimate (RE) for FY25. However, the allocation is 4.47% lower than the actual estimate (AE) for FY24.
Company-Wise Budget Allocation
- Indian Oil Corporation (IOCL): The Ministry of Petroleum and Natural Gas (MoPNG) has proposed a budget estimate of ₹35,293.85 crore for IOCL in FY26. This marks a 14.14% increase from the BE for FY25 but a slight 1.48% decline compared to the RE for FY25.
- Bharat Petroleum Corporation (BPCL): The BE for BPCL in FY26 stands at ₹18,500 crore, reflecting a significant 42.31% increase over both the BE and RE for FY25.
- Hindustan Petroleum Corporation (HPCL): The BE for HPCL is lower by 8% compared to both the BE and RE for FY25.
Conclusion
India’s growing energy demand is driving significant capital investments by PSU OMCs. With an increased focus on refining and petrochemicals, the government has allocated a higher budget for these enterprises. OMCs plan to increase overall capex in FY26. However, individual company allocations vary. This reflects strategic priorities in India’s evolving energy landscape.
