The Government of India has commenced the process to fund state-backed refiners’ energy transition initiatives, reported Reuters, citing sources.

Last week, the Oil Ministry directed Indian Oil Corporation (IOC) and Bharat Petroleum Corporation Limited (BPCL) to launch rights issues, the sources said.

Meanwhile, Hindustan Petroleum Corporation Limited (HPCL) was directed to allot preferential shares to the government of India, they added.

Late last week, BPCL said its board would be meeting on 28 June to discuss different capital injection options, including a potential rights issue to help it accomplish its goals for the energy transition, net zero, and energy security.

Requests for comment were not immediately answered by IOC, HPCL, BPCL, and the oil ministry.

As per the country’s 2023–24 federal budget, the government plans to provide state oil refineries Rs300bn ($3.66bn) in equity to assist them in switching to sustainable energy.

To achieve their net zero-emissions targets by 2040, the three refiners together intend to invest between Rs3.5tn and Rs4tn, according to the sources.

The sources said that IOC would soon ask the board for permission to increase its authorised share capital before the proposed rights offering.

The three refiners are expected to finish the process by October this year, the sources said, adding that the exact date will depend on the market conditions.

Additionally, the three companies are seeking to raise debt to fulfil their 2040 objectives.