An ambitious projection by a government panel on electric vehicles over the next decade has created jitters among the oil refining industry which has lined up billions of dollars to ramp up capacity in the world’s fastest growing major economy.

From a paltry 0.02 per cent share in the transport sector in FY15, electric vehicles are projected to reach a share of 25 per cent by 2025 and 40 per cent by 2030, a working group mandated by the Ministry of Petroleum and Natural Gas has concluded in a 2018 report after evaluating various scenarios, according to Vijay Sharma, Director (Refinery) in the Ministry.

Saving fuel costs

Based on current trends, the working group wrote that India will require 472 million tonnes (mt) of petroleum products by 2040. A transition to a mix of electric vehicles and renewables will cut the requirement to 387 mt. But, if a transformation occurs through large scale deployment of electric vehicles and renewables, the requirement will dip drastically to 266 mt, Sharma said at the ‘Refining & Petrochemicals Technology Meet’ on Saturday.

Sharma said that electric vehicles will save more than 30 per cent on fuel costs and help reduce India’s oil imports. Electric vehicles play a key role in achieving climate change goals and sustainable development in the transport sector, he stated.

Capacity, infrastructure

This is expected to have a bearing on India’s refining capacity expansion plans.

Based on current trends, the working group has projected that India needs a refining capacity of 438 mt by 2030, up from 249 mt that includes the planned mega West Coast refinery at Ratnagiri where Saudi Aramco and ADNOC have agreed to invest along with IOCL, HPCL and BPCL.

India, according to the working group, will need an annual refining capacity of slightly more than 530 mt by 2040 to meet only domestic demand, Petroleum Secretary MM Kutty said.

If a 25 per cent export surplus is to be created, then the refining capacity need to be about 670 mt, Kutty added.

Based on these assumptions and scenarios, the ‘committee on firming up requirement of refining capacity and related infrastructure due to emerging technological developments, innovative business models and climate concerns’, have concluded that the demand projections may be reviewed in 2020.

“We have to take a call by 2020 whether the planned refinery expansions would be required or not,” Sharma said.

“Kindly ask the person who made the presentation. Our expansion plans are all declared plans. I can’t be commenting on somebody else’s presentation,” said Sanjiv Singh, chairman of Indian Oil Corporation Ltd (IOCL), India’s biggest state-run oil refiner.

“Electric mobility certainly is one way of reducing India’s hydro-carbon imports. (But) over projections on electric vehicles may impact and subdue investment in the refining sector and that is a risk we can ill afford,” says Anil Kakodkar, Chairman, Scientific Advisory Committee, Ministry of Petroleum and Natural Gas.

B Ashok, chief executive officer of Ratnagiri Refinery and Petrochemicals Ltd, said that “the choice was between a shortage and having a problem of availability of energy to visualising certain amount of risks which could happen because the world is going to change.”

“Nobody has a clear answer. Do you think electric vehicles are really going to replace overnight,” he asked on Saturday.

Ashok, a former chairman of IOCL, said that the ministry working group projections should be looked at from the context of incremental demand for passenger cars. But this could pose a problem due to lack of clarity on the number and type of new vehicles manufactured annually by 2025 or 2030.

“While we are focussing on moving towards cleaner fuels, major share of energy basket will still remain with fossil fuels in the near future, especially in the transportation sector, where the demand for petrol and diesel will have to be met by our refineries,” Petroleum Secretary Kutty added.

Related Topics