The company’s board has approved the diversification of IndianOil Petronas (IPPL), a joint venture of IOCL and Malaysia-based Petronas, into auto-fuel retailing business in India.
Interacting with the media after the results announcement on Friday, IOCL chairman SM Vaidya said the company’s board has approved the entry of IndianOil Petronas (IPPL), a JV of IOCL and Malaysia-based Petronas, into auto-fuel retailing business in India. Excerpts from the interaction:
On Petronas JV:
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The company’s board has approved the diversification of IndianOil Petronas (IPPL), a joint venture of IOCL and Malaysia-based Petronas, into auto-fuel retailing business in India. IPPL currently focuses mainly on operating LPG import terminals at Haldia and Ennore. We have extended the MoU with IPPL to include natural gas and transportation fuel retailing business. The details of the new business have not been worked out yet. The entire energy pie is increasing, so there is no question of this upcoming venture cannibalising IOCL’s current fuel retail business. There is a scope for everybody. We intend to get the best practices of the global companies into India.
On asset monetisation:
To begin with, we have identified two hydrogen units in Gujarat refinery, each with a capacity of 70,000 tonne per annum. At the moment, the recently announced green hydrogen production unit at Mathura refinery is not part of the asset monetisation programme. That is a new initiative. In the second phase, we will be monetising the other five high-capacity hydrogen units spread across the other refineries.
On global fuel rates:
After a steep fall after Opec’s decision to raise output, global crude prices have crept back to $75/barrel. Diesel cracks have decreased from $5.14/barrel in June to around $4.67/barrel in July, while gasoline cracks have increased from $4.78/barrel to $7.64/barrel. (Global cracks have a bearing on the base prices of the fuels charged by IOCL). As the country majorly depends on crude imports, I think a price range of $60-$70/barrel will be welcome.
Petrol sales reached pre-Covid levels in the first week of July 2021. However, diesel demand is yet to recover and currently sales are hovering around 88% of pre-Covid levels. For ATF, challenges have become more acute, with current monthly sales recorded at around only 50% of pre-Covid levels. I expect that by Diwali, diesel demand should be able to reach pre-Covid levels. For ATF to come back to normal, I think we have to wait till the end of the ongoing financial year.
On the upcoming greenfield Nagapattinam refinery:
We are on the lookout for a strategic partner for the upcoming Nagapattinam refinery in Tamil Nadu, and the process is still on, and we have not narrowed down to anybody as yet. (IOCL’s board had approved the setting up a 9 MT per annum capacity refinery at Nagapattinam. The project, with an estimated gross value of`31,500 crore will be built jointly with IOCL subsidiary Chennai Petroleum Corporation, with both the entities investing in 25% stake each in the upcoming refinery. The company is looking for a strategic partner to invest in the remaining stake.)