MUMBAI, With the Union Budget just a month away, the oil and gas industry is hopeful for government allocations towards energy transition and reforms promoting natural gas consumption. Finance Minister Nirmala Sitharaman is scheduled to present Budget 2024 on February 1 in Parliament.
All eyes are on any comments regarding the industry’s persistent demand for the inclusion of petroleum products under the Goods and Services Tax (GST) regime. Sitharaman has hinted at “no spectacular announcements,” clarifying that the full budget for FY25 would follow the formation of a new government after general elections in April-May 2024.
Industry insiders anticipate a focus on energy transition and net zero-emission targets for oil Public Sector Undertakings (PSUs). In the previous budget, Sitharaman allocated Rs 30,000 crore for capital investments towards energy transition, setting net zero-emission objectives for state-owned oil marketing companies (OMCs). However, this amount is yet to be assigned to the OMCs.
Despite the industry’s call for GST inclusion, petroleum products remain outside its purview. Stakeholders have urged the government to consider including products like petrol, diesel, natural gas, and aviation turbine fuel (ATF) under GST to facilitate a smoother flow of input tax credit and avoid stranded taxes.
Experts suggest that oil PSUs might receive lower budgetary support in the upcoming budget, with potential shifts in government expenses towards improving the energy sector, especially green and sustainable energy. The industry is also hopeful for reforms benefiting city gas distribution (CGD) players to enhance natural gas consumption.
Additional expectations from the budget include simplifying foreign direct investment (FDI) policies, discontinuation of windfall tax, categorizing the oil and gas industry as an infrastructure sector for improved financing, and exempting Liquified Natural Gas (LNG) from customs duty.
