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MUMBAI : Bharat Petroleum Corp. Ltd (BPCL) plans to spend 25,000 crore to build a renewable energy capacity of 10 gigawatts (GW) comprising a mix of solar, wind, small hydro and biomass, a senior company official said on Thursday.

“We have aspiration to reach 1 gigawatt of renewable energy in the short term (by 2025) and a 10 gigawatt portfolio, say, by 2040 or earlier," Amit Garg, executive director, renewable energy, BPCL said.

The capacity being built in the short term would be to meet the state-run company’s captive demand, primarily from refineries and a proposed petrochemicals unit. BPCL could also sign power purchase agreements with buyers, the company said.

BPCL’s planned renewable energy portfolio would comprise solar (800 MW), wind (100 MW), small hydro (60 MW), and biomass (40 MW). Hydrogen could also be included in the portfolio at a later stage. The company has collaborated with Bhabha Atomic Research Centre (BARC) to scale up alkaline electrolyzer technology for green hydrogen production.

BPCL is scouting for suitable land to build power producing units in Uttar Pradesh for 80-100 MW; Bina, Madhya Pradesh (20 MW in Phase I), Rajasthan (250–500 MW) and Delhi of less than 5 MW.

“We are committed to Scope 1 and 2 and aim to be net zero by 2040. We are seeing a shift from fossil fuels to renewable energy. India would be among the countries that will continue to grow in fossil fuels, but we understand that it has to eventually move to clean energy," the company said.

BPCL has committed to offset emissions from refining operations and from the energy it uses by 2040, referred to as Scope 1 and 2 emissions.

Last month, BPCL tied up with the Solar Energy Corporation of India, under the ministry of new and renewable energy, to build 10 GW of renewable capacity by 2040.

“These investments will make BPCL a more investor friendly company. BPCL’s privatization process has slowed down as investors are cagey about investing in a fossil fuel company when energy companies the world over are moving towards building a greener portfolio," said an analyst from a domestic brokerage tracking BPCL.

The pandemic has altered the investment climate for energy companies. Investor activism has forced these companies to look at building a greener portfolio, scaling back investments in fossil fuel projects.

This is likely to hit plans of the government to divest its 52.98% stake in BPCL for 60,000 crore. So far, billionaire Anil Agarwal’s Vedanta group, private equity firm Apollo Global and I Squared Capital’s Think Gas arm have expressed interest in buying the government stake.

The privatization is likely to be pushed to the next fiscal. The pandemic had last year forced the government to extend the deadline four times for submitting preliminary expressions of interest in BPCL. The government had initially targeted to call financial bids by August 2021 and get the sale and purchase agreement signed by September to complete the deal by March 2022.

The postponement of divestment will, thus, also affect the government’s plan to raise a record 1.75 trillion from disinvestment proceeds this year, as BPCL’s privatization is expected to account for more than a third of its overall disinvestment target. Meeting the overall divestment target now entirely hinges on the success of the initial share sale of India’s largest insurer, Life Insurance Corp. of India.

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