New Delhi: India may create a sovereign fund to help state-run firms compete for overseas energy assets with rivals from China, a government official said.
The oil ministry has formally asked the finance ministry to use a part of the nation’s $254 billion (around Rs11.6 trillion) foreign exchange reserves for the proposed fund, the official said, declining to be identified because a decision hasn’t been reached.
Helping hand: ONGC’s R.S. Sharma says the fund would help in competing with China. Rajkumar / Mint
‘Mint’ had reported on 17 February about the petroleum ministry seeking access to the country’s foreign exchange reserves so it can acquire more energy assets abroad.
“Such a fund would be very, very welcome if we are to compete with the Chinese,” R.S. Sharma, chairman and managing director of Oil and Natural Gas Corp. Ltd (ONGC) said by the telephone.
India has trailed China in the quest for oil as ONGC and rivals PetroChina Co. Ltd and Cnooc Ltd scour the globe for resources to meet demand in the fastest growing major economies. Chinese firms spent a record $32 billion last year to buy oil, coal and metal assets in Africa, Asia and Australia, compared with $2.1 billion invested by ONGC in India’s only energy acquisition.
“India needs to speed up overseas acquisitions to cater to economic growth,” Dharmakirti Joshi, principal economist at Crisil Ltd, said from Mumbai. “India’s forex reserves have been strong enough of late and companies here need a boost.”
Oil minister Murli Deora declined to comment. B.S. Chauhan, finance ministry spokesman, said he can’t comment on discussions between ministries.
Cnooc, China’s biggest offshore oil explorer, this week agreed to buy half of Argentina’s Bridas Corp. for $3.1 billion, capping $6.6 billion of acquisitions in four years. China Investment Corp., the country’s $300 billion sovereign wealth fund, last year invested in energy and mineral producers in nations including Canada, Indonesia and the US.
(Mint’s Utpal Bhaskar contributed to this story.)