Rosneft eyes Indian solar power market

New Delhi: Russia’s OAO Rosneft, the world’s largest publicly traded oil company, is exploring a huge investment in solar energy in India, in a move that is as much a sign of the company’s interest in the Indian market as it is the potential of solar energy in the country.

“Representatives from Rosneft have met the Indian government officials. They want to set up a capacity ranging between 10,000MW (megawatts) to 20,000MW,” said a government official who spoke on condition of anonymity. At an investment of around Rs.6 crore per MW, a 10,000MW capacity will entail an investment of around Rs.60,000 crore.

Russian energy companies are looking at new investment avenues in the aftermath of the collapse of international crude prices and also to work around the economic sanctions imposed on the country by the US and the European Union. At the same time, India is seeking to expand its energy mix by encouraging more investment in green power.

Rosneft’s interest also stems from India’s plans to install 100,000MW of solar power capacity by 2022. India needs as much as $200 billion to meet its target and the government aims to provide green power at less than Rs.4.50 a unit.

This initiative comes in the backdrop of news that the Essar Group plans to sell as much as 49% of Essar Oil Ltd to Russia’s OAO Rosneft, in which the largest shareholder (with a 69.5% stake) is the Russian government.

BP Plc. holds 19.75% and 10.75% is with other shareholders.

Rosneft’s businesses include hydrocarbon exploration and production, upstream offshore projects, refining, and crude oil, gas and product marketing in Russia and abroad.

India on its part has been trying to secure energy resources in Russia by leveraging its historical association with the country. Indian investments in Russia, mainly in the hydrocarbon sector, total around $4.25 billion.

Queries emailed to a Rosneft spokesperson remained unanswered till press time; an Essar Group spokesperson said in an email that the group is “not privy to any such plans of Rosneft”.

Rosneft’s move also reflects happenings in the oil and gas market, a former bureaucrat said.

“A petrogas giant coming to India in the renewable energy sector could well point to a certain nervousness in the petroleum sector in respect of price stability. Investment in India at this point of time also indicates that other international markets are not very attractive investment destinations,” said Anil Razdan, India’s former power secretary.

Crude oil prices in the Indian energy basket averaged at $61.75 per barrel in June, as against $84.16, $105.52, $107.97 and $111.89 in 2014-15, 2013-14, 2012-13 and 2011-12, respectively.

Razdan also warned about the poor finance health of India’s state electricity boards that buy power from generators and which could derail any investment in green power generation.

“For sustaining this kind of investment in the renewable energy sector, the Indian power sector will have to ensure that the distress in the distribution segment is eliminated at the earliest,” he said.

State electricity boards are laden with debt of Rs.3.04 trillion and losses of Rs.2.52 trillion.

There has been a growing interest from overseas investors in the Indian renewable energy space. SoftBank Corp., along with Bharti Enterprises Ltd and Taiwan’s Foxconn Technology, in June proposed to invest at least $20 billion in solar energy projects in India through a joint venture, SBG Cleantech Ltd. US-based First Solar Inc. and China’s Trina Solar are among firms that are considering plans to set up manufacturing facilities in India.

US-based SunEdison Inc. had also said it plans to establish a joint venture with Adani Enterprises Ltd to build a solar photovoltaic manufacturing facility in India with an investment of around $4 billion.

The Narendra Modi-led government has pushed renewable energy to the top of its energy security agenda, seeking to minimize India’s dependence on coal-fuelled electricity. Renewable energy accounts for only 35,777MW of India’s total power generation capacity of 272,503MW.

 

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.