“IOC will use green energy to power all new capacities”
Q: Net zero is the buzzword. What are your plans?
A: We need to be in tune with the government that says by 2050 we should all be zero. But we also need to clearly understand the realities of this part of the world as compared to the developed world. Emerging economies are totally different in the way they consume energy. So given the availability, accessibility and security of energy which is the main concern for me, I firmly believe that all forms of fuel have a place to stay.
Now, net zero can be broken down into categories: one, what energy we use. Suppose we become net zero in this. The second is the grid feed. If it is green, then the second step is also cleared. Third, what we produce and use, such as gasoline and diesel, which becomes net zero. It is a tall order. So one way is to reduce the energy we use, to bring more energy efficiency. This in itself will significantly reduce emissions. Second, whatever electricity we get from the grid, we will make sure it is green.
We are investing heavily in solar and wind power. We have an operational 75 MW wind power project in Rajasthan. We are bidding for a solar capacity of 250 MW. We can use the grid to transmit that electricity to our factories. We have several expansion projects down the line. The intention is to run the full capacity extended to green electricity. They will not have captive power plants.
Q: What about new age mobility solutions?
A: Fossil fuels will be there but gas will play a big role because the government rightly chose it as a transitional fuel. We are committed to CNG and CBG (compressed biogas) as part of the government program SATAT (Sustainable Alternative Towards Affordable Transportation). We have issued over 2,000 LoIs for CBG plants. It will be a game changer for us.
The best part about CBG is that it kicks off the total economy. Today, 50% of employment and almost a third of GDP come from the agricultural sector. CBG under the SATAT regime creates rural jobs and deals with agricultural and urban waste.
Our R&D works on the production of hydrogen by different routes. We are introducing 15 hydrogen buses to the NCR region.
We are also investing in the production of 99.999 purity hydrogen at the Gujarat refinery for hydrogen fuel cell buses. We intend to operate them soon on the iconic Baroda-Sabarmati and Baroda-Statue of Unity (Kevadia) routes in Gujarat.
We intend to use wind power from our Rajasthan project to produce green hydrogen by electrolysis at the Mathura refinery, as is the case in the Taj Trapezium area.
All of these will contribute to net zero.
Q: How does hydrogen compare to diesel in terms of cost?
A: We are too far off to compare the cost of hydrogen with that of diesel. Right now we only compare green and gray or blue hydrogen (production method) from elsewhere. Hydrogen from fossil fuels, or gray hydrogen, costs around $ 80 / kg, but if you go for green hydrogen (produced by electrolysis of water using green energy), it becomes four times more expensive. So far this is not a profitable option, otherwise we would have made progress in this direction. But we have to get the ball rolling, or the hydrogen becomes available, then the buses and everything else starts to happen. This is why we intend to supply hydrogen from Gujarat at a subsidized rate so that we can support the ecosystem (for buses).
Q: When do you expect fuel demand to reach pre-Covid levels?
A: The gasoline is already there. Diesel I wait in a quarter max; by Diwali. ATF (jet fuel) will take a while, maybe six months or next year.
Q: How will the competition after the privatization of BPCL and the energy transition impact your commercial character?
A: Today we have around 32,000 points of sale. All of them are automated. We know the fuel units dispensed on each delivery or which outlet is closed. Automation guarantees quality and quantity to our customers. We are on par with everyone who enters the market, whether private or public.
The second part concerns alternative fuels. We are adding charging points for electric mobility, CNG and CBG in our outlets, where possible. CBG will be a big fuel for the future. We are the only oil company to offer CBG in 23 points of sale. Hydrogen is still a long way off and there will be few places where we dispense it. We got the ball rolling. Ultimately, we will ensure that it expands as well. LNG is also coming. We have been tasked with setting up 20 of the 50 planned outlets along the Golden Quadrilateral.
Q: How many outlets will offer multiple fuel options?
A: About 10,000 of our 32,000 outlets are Kisan Seva Kendras. For the sake of argument, let’s delete them. Then at least a third of the remaining 22,000 outlets will have multiple fuel options to start.
Q: What has been the impact of Covid-19 on your business expansion?
A: You see, 50 years later, Covid-19 will only be an incident in human history. So we didn’t let our business suffer. Last year we ordered 3,000 outlets, the highest ever recorded by IndianOil. This year we intend to do a lot more.
Q: Does such an expansion make sense given the push on gas, ethanol and electric mobility?
A: What you say is correct if the demand for fuel is stagnant, the number of outlets will reduce everyone’s business. But the whole pie is increasing.
We have a third of the world average in terms of energy consumption per capita. We are the only growing economy, except China, where energy consumption is increasing by leaps and bounds.
Please understand that the capacity of 250 million tonnes (of refining) is likely to increase to 400, so additional fuel is there. Demand is picking up, we are not stagnating. Ethanol will not replace gasoline, it will be added to the MS pool (gasoline or gasoline). Suppose today I make 100 kl (kiloliter), it will become 120 kl. It will reduce my dependence on imports since ethanol will be something I will produce in the country and emit less because it will be green fuel.