InvestorQ : Is it true that ONGC is reducing some its capital outlays in the current situation?
diksha shah made post

Is it true that ONGC is reducing some its capital outlays in the current situation?

Answer
user profile image
Archita Jajjoo answered.
3 months ago


That is correct that in the light of the post-COVID cash crunch, ONGC has decided to optimize some of its capital outlays. It is not that they are cutting outlays across the board but the decision will be more on a case by case basis. In the March quarter, ONGC got hit by tepid oil prices with refiners using the Force Majeure clause to reduce off-take of crude oil.

Even natural gas output suffered due to lower demand as city gas suppliers also reduced their off-take due to limited demand. ONGC has also stated that the supply chain constraints imposed by the COVID-19 lockdown has resulted in the completion dates of many projects being put off.

Labour shortfalls are also implementing the pace of completion of expansion projects. Labour that went back to the smaller towns and cities of India never came back and it looks like it will be some time before normal activity can resume. Also, the supply chain constraints has meant that many of the operations may have to be held up.