The Indian government this week kicked off a multi-billion-dollar process seeking equity in its three big state refiners in return for funding towards the firms’ energy transition projects, three sources familiar with the matter told Reuters.

The oil ministry on Wednesday asked state-controlled Indian Oil Corp and Bharat Petroleum Corp Ltd (BPCL) to launch rights issues, and asked Hindustan Petroleum Corp Ltd (HPCL) to make a preferential share allotment to the government, the people said.

BPCL informed India’s stock exchanges on Thursday of a board meeting planned for June 28 to consider various possibilities for capital injection, including a potential rights issue, to help achieve its energy transition, net zero and energy security objectives.

Indian Oil, HPCL, BPCL and the oil ministry did not immediately respond to requests for comment.

In the 2023-24 Union budget unveiled in February, finance minister Nirmala Sitharaman announced that the government would provide Rs 300 billion ($3.66 billion) in equity to help state oil refiners move towards cleaner energy.

Combined, the three refiners aim to invest Rs 3.5-4 trillion to reach their net zero-emissions goals by 2040, the sources said this week.

Indian Oil, the country’s top refiner, will soon seek board approval to raise its authorised share capital ahead of the planned rights issue, two sources said.

Indian Oil and BPCL are majority owned by the federal government.

The government’s seeking of a preferential allotment of shares from HPCL follows the 2018 sale of the government’s 51.1 per cent stake to state-run Oil and Natural Gas Corp.Reuters