IOCL plans ₹22,000 cr rights issue for energy transition

The board approved “raising of capital by way of the issue of equity shares on rights basis up to an amount not exceeding ₹22,000 crore, subject to necessary statutory approvals”, it said, adding that details such as the issue opening and closing dates and issue price would be made available later.

The development comes a week after the board of Bharat Petroleum Corp. Ltd approved an ₹18,000-crore rights issue.

The capital raising plans are in tandem with the companies’ plans to diversify operations as part of its energy transition initiatives. For instance, IOCL has set an ambitious target of reaching net-zero by 2046 and has entered sustainable aviation fuel and green hydrogen production. It is also looking to expand its renewable energy portfolio substantially from 238 megawatts, besides installing 10,000 charging stations for electric vehicles in the next three years.

A recent Fitch Ratings report said the plan of state-run OMCs to raise equity capital is likely to strengthen their capex spending and the credibility of their emission-reduction plan. “The higher capex on energy transition and emissions reduction may have more influence on the OMCs’ standalone credit profiles, but we do not expect it to play significant role in the next few years,” it said.

An increase in OMCs’ green capex should coincide with the waning refining capex over the medium-to-long term. “We believe the equity issuance will strengthen the OMCs’ balance sheets, improving their capacity to undertake such capex.”

The IOCL board also gave its nod for a 50:50 joint venture for battery swapping with Singapore’s Sun Mobility Pte. Ltd.

Singapore with Indian Oil’s equity investment of ₹1,800 crore till financial year 2026-27. This is another major move of the company in the electric vehicle charging space.

The battery swapping business in India is at a nascent stage in the country and the government is also trying to give policy support to players in this space. NITI Aayog came up with the draft battery swapping policy last year, however, the policy has not been finalized yet.

In a bid to diversify its operations from its conventional oil refining and marketing business, Indian Oil had last month incorporated a joint venture company with NTPC Green Energy Limited, named ‘Indian Oil NTPC Green Energy Private Limited’. The company would develop renewable energy based power projects to meet

the round-the-clock (RTC) power requirements of new projects of Indian Oil’s refineries.

Its shares on Friday closed at ₹99.25 on the BSE, higher by 0.66% from its previous close.

Updated: 07 Jul 2023, 11:40 PM IST