New Delhi: India’s largest oil refiner, the state-owned Indian Oil Corp. Ltd, or IOC, will invest around Rs2,000 crore to develop a wind power generation capacity of 200MW and a solar power generation capacity of 50 MW, said a top company official.
“Renewables will be a major area of focus for us. We are looking at a 10-year horizon,” said IOC chairman B.M. Bansal. “The reason why we are looking at renewables, petro chemicals or biodiesel is because we do not know for how long the subsidy issue will take to be resolved. Renewable is the way forward.”
Oil-marketing companies such as IOC, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd, which operate almost 95% of petrol and diesel retail outlets across the country, are expected to end the current fiscal year with losses of around Rs45,000 crore on account of not being allowed to charge market prices for fuel.
The combined losses are seen at around Rs70,000 crore in 2010-11 at current prices.
IOC registered a net profit of Rs2,950 crore on revenue of Rs2.85 trillion in 2008-09. Between April and December, it had a profit of Rs4,664 crore on a revenue of Rs70,415 crore.
The company’s under recovery for the nine months was Rs7,936 crore, after taking into account upstream discount and oil bonds.
“While an investment of Rs1,000 crore will go towards setting up the wind power capacity, another Rs1,000 crore will be for setting up the solar power capacity,” Bansal said.
India has a power generation capacity of 157,000MW, of which 15,427MW is generated through renewable sources. The Jawaharlal Nehru National Solar Mission aims at achieving 20,000MW of grid solar power and 2,000MW of off-grid solar applications.
Setting up wind power generation capacity will also help IOC claim tax breaks for up to 10 years and get depreciation benefits of up to 80% on investment in the first year of a project’s operation, besides earning carbon credits.
“The fuel subsidy issue has discouraged investment into the sector, which has a dampening effect on the national oil companies,” said Gokul Chaudhri, partner at consultancy firm BMR Advisors. “Oil companies such as IOC are recalibrating where they will be investing and (are) now looking at sectors which are not regulated in the (same) manner as fuel prices.”
IOC has been looking at a diversified energy sourcing. The company plans a partnership with Nuclear Power Corp. of India Ltd (NPCIL) for atomic energy projects at Kakrapar in Gujarat (1,400MW), Kudankulam in Tamil Nadu (2,000MW) and Jaitapur in Maharashtra (3,300MW).