India's first green hydrogen tender meets a chaotic end

The green hydrogen space in the country is in a nascent stage and is expected to pick up in the coming years. (File Photo: Bloomberg)
The green hydrogen space in the country is in a nascent stage and is expected to pick up in the coming years. (File Photo: Bloomberg)

Summary

  • The tender had received just one bid, from GH4India Pvt. Ltd, an Indian Oil joint venture (JV) with Larsen & Toubro and ReNew

New Delhi: State-run Indian Oil Corporation (IOCL) has cancelled its tender for setting up India’s first green hydrogen production unit with a 10 kilo tonne per annum (ktpa) capacity amid weak response from bidders and a legal battle over alleged bias in the tendering process.

On 25 December, Mint reported that the tender had received an only bid from GH4India Pvt Ltd, which is IOCL’s own joint venture (JV) with infrastructure and engineering major Larsen & Toubro (L&T) and renewable energy company ReNew. The JV, in which all three companies have equal stakes, was formed in August 2023.

Indian Oil, L&T, ReNew and union ministry of petroleum and natural gas did not respond to emailed queries.

Further, an industry body of green hydrogen firms—Independent Green Hydrogen Producers’ Association (IGHPA)—approached the Delhi High Court in November, alleging bias towards IOCL’s JV in the tender clauses. The plea was admitted on 29 November, and the court had issued notice to the Centre and other parties asking to file affidavits.

In the latest hearing on 2 February, 2024, the court also directed the industry body to submit its rejoinder to the response of the government and Indian Oil at the earliest.

The high court, which is scheduled to next hear the matter on 28 March, did not stay the tender. However, the oil marketing company, which had floated the tender on 29 August, announced its cancellation through a corrigendum on 21 February.

IGHPA had petitioned the Delhi high court against the tender, particularly against the right to first refusal clause.

The right to first refusal clause (Clause 19 of the tender) gives IOCL preferential right to purchase excess green hydrogen generated at the green hydrogen generation unit (GHGU). In case IOCL does not confirm the purchase within 60 days, the operator can offer the gas to third-party customers. However, the price offered to them cannot be lower than what was offered to IOCL. Other terms and conditions offered, too, must be less favourable than those offered to IOCL.

The parties would have to agree that IOCL shall be entitled to exercise its right of refusal every time the quantity of the green hydrogen generated at the GHGU increases on account of capacity augmentation or technological upgradation, modification or restructuring, said people in the know.

IOCL’s tender, released on 29 August, was for a BOOT (build, own, operate, transfer) contract for a GHGU of 10 kilotonne per annum (KTA) at its existing Panipat Refinery Petrochemical Complex in Haryana. The tender was for a contract of 25 years, wherein the selected player would maintain and operate the project for the duration.

IGHPA was formed in 2022 by six renewable energy companies—Azure Power, Acme Group, Fortum India, O2 Power, Sprng Energy and SunEdison Infrastructure. The industry body argued that the government cannot arbitrarily choose any person it likes for entering into a commercial relationship, thereby discriminating between similarly situated persons.

“They further submit that the Supreme Court has repeatedly warned against specific clauses in tenders which have the effect of favouring a single tenderer," the High Court order dated 29 November had noted.

The green hydrogen space in the country is in a nascent stage and is expected to pick up in the coming years.

Under the government’s Strategic Interventions for Green Hydrogen Transition (SIGHT) Scheme, Reliance Green Hydrogen and Green Chemicals, ACME Cleantech, Greenko ZeroC, Welspun New Energy, Torrent Power are among the players selected for setting up green hydrogen projects.

Under the national green hydrogen mission, the government aims to bring a total investment of 8 trillion into the country by 2030.

Last year, Reliance Industries announced that it has chalked out a roadmap for bringing down the price of green hydrogen to $1 per kg in India. It would produce green hydrogen and electrolyzer under its 75,000 crore investment plan for energy transition and green energy.

ACME Group, along with Japan’s IHI Corporation plans to invest 60,000 crore in setting up a green hydrogen project in Odisha. The two companies last month tied up to supply ammonia (a derivative of green hydrogen) to Japan.

Green hydrogen is a key catalyst for the ambitious target of decarbonizing the refinery process and lowering emissions. Hydrogen is primarily used in the refining, steel and fertilizer sectors.

The country’s refining sector consumes around 2 million tonnes of grey hydrogen every year, with IOCL owning one of the largest shares of the country’s refining output. IOCL has also set an ambitious net zero target of 2046, the year of the centenary of India’s Independence.

Grey hydrogen is produced from natural gas, a fossil fuel, thereby leading to higher emissions during the production process, while green hydrogen is produced from renewable energy, like solar and wind.

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