Asia's third largest economy, facing an over 40% shortfall in collecting revenues from stake sales in state-run companies, is prioritising spending to try to limit its fiscal deficit to 5.9% of GDP for this fiscal year to the end of March.
State-run Bharat Petroleum Corp and Hindustan Petroleum Corp (HPCL.NS) aim to end net carbon emissions from their operations by 2040, and Indian Oil Corp (IOC.NS) has set a target for 2046.
To help the companies reach the goals, 300 billion rupees ($3.61 billion) in equity support was announced in the budget for this fiscal year.
But an industry and a government official said the funds will be provided in a staggered manner and the government will give 150-billion-rupee equity support in 2023/24.
As the refiners' financial position is sound and they do not require 300 billion rupees for capex this year, the government has lowered the amount, one of the sources said.
All the sources with direct knowledge of the matter spoke on condition of anonymity because the details have yet to be approved by the federal cabinet.
India's oil ministry, the finance ministry and oil companies did not respond to Reuters' emails seeking comments.
Two industry sources said BPCL and IOC will halve the size of their planned rights issues to 90 billion rupees and 110 billion rupees, respectively.
The refiners do not need funds immediately for energy transition projects, and their capex will only increase significantly after two-to-three years, one of the two industry sources said.
A second government source said Oil and Natural Gas Corp (ONGC.NS), the parent firm of HPCL, will enhance government's stake in it by 1%-1.5% through the preferential issue of shares.
The details of government's plan to halve its equity stake, the reduced size of IOC and BPCL's planned rights issue, and the preferential issue by ONGC have not been reported previously.
The government cannot directly inject funds into HPCL, as in 2018 it sold its entire 51.1% stake in the company to ONGC.
The government has considered various options to fund HPCL including a rights issue by ONGC.
Two industry sources said the government has asked oil companies to launch rights and preferential issues by mid-March to complete the process before next fiscal begins on April 1.
