Indian Oil plans to monetise its hydrogen-producing facilities to raise about Rs 10,000 crore, according to people familiar with the matter.
The nation’s largest oil refiner and fossil fuel retailer is also India’s biggest hydrogen producer. It now aims to hive off some of its hydrogen-producing units and sulphur recovery facilities at its refineries to a separate entity and sell stakes in it to one or more private companies, the people said.
The company has proposed the idea to the government, which is studying it. The plan to monetise the hydrogen-producing facilities was in response to the government’s proposal to sell stakes in oil and gas pipelines of Indian Oil, GAIL, and Hindustan Petroleum.
Indian Oil is not too keen to sell a stake in its pipelines and has instead suggested a stake sale in its hydrogen facilities, the people said.
The government expects Indian Oil, GAIL and Hindustan Petroleum to raise Rs 17,000 crore by selling stakes in their pipelines through the infrastructure investment trust route in the next financial year. Of this, Rs 8,000 crore is targeted from Indian Oil’s pipelines and the remainder equally from GAIL and Hindustan Petroleum.
Indian Oil executives are of the view that monetisation of some of its hydrogen-producing units can help generate Rs 10,000 crore-12,000 crore, although it would mean selling a significant stake in them to private companies.
Indian Oil will continue to source hydrogen from these facilities, which will have the freedom to sell the gas to third parties, the people said. Transporting hydrogen to neighbouring industrial clusters via pipeline can be another revenue generator for the facility. Hydrogen is used to make fertilisers and has other industrial applications.
Refineries usually have large facilities to produce hydrogen that they use in the processing of intermediate oil products and for the removal of sulphur from refined fuels to meet emission standards. Indian Oil mostly uses natural gas and naphtha to produce hydrogen. It has the capacity to produce about 720,000 million tonnes of hydrogen a year.
The government has announced a national hydrogen mission. Indian Oil, which aims to build a network to retail hydrogen in the future, now also plans to venture into green hydrogen.
