Rs 35K cr for energy transition: Energy sector awaits disbursement details

No decision has been taken on how to utilise this money for green initiatives and the government is yet to come out with any guidelines too

The Rs 35,000-crore Energy Transition Fund announced in the Union Budget has caused a furore in the energy sector as the entire amount has been directed towards the Ministry of Petroleum and Natural Gas (MoPNG), without clear disbursement details. 

Senior officials, however, told Business Standard that the total amount could be distributed among other energy ministries, such as power and new and renewable energy, as well. They also said a clarification is expected from the Ministry of Finance soon on the issue.

According to the expenditure budget of MoPNG, of the entire transition fund amount, Rs 30,000 crore has been allotted to oil marketing companies (OMCs) as “capital support”. Some energy sector experts said this is to support OMCs for keeping consumer fuel prices stable even as crude oil prices escalated globally. But some officials said the energy transition fund amount is yet to be fixed for every ministry.

A senior executive from a state-run OMC told Business Standard that no decision has been taken on how to utilise this money for green initiatives and the government is yet to come out with any guidelines.

 According to sources close to the development, the three OMCs -- Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL) -- are likely to utilise the energy transition fund in three segments. “This may include investments in biofuel, setting up of charging facilities at fuel outlets, and for adoption of green hydrogen. It will be decided based on the government’s priority,” said a source.

Giving green energy a push, OMCs are targeting to ensure the availability of electric vehicle charging, compressed natural gas, and liquefied natural gas or compressed biogas at around 22,000 fuel outlets across the country by 2024. A good share of the budget allocation may go into this initiative. According to the Petroleum Planning and Analysis Cell (PPAC), of total 77,111 retail outlets of state-run OMCs, around 12 per cent or 8,975 have either electric charging facility, or CNG/ LNG/ auto LPG/ CBG outlets. As of December, around 4,937 OMC fuel outlets had EV charging facilities, too.

The government has already announced the phased roll-out of E20 (20 per cent ethanol blending into gasoline) from April 1. On bioethanol too, OMCs were planning to come up with 12 plants for an investment of around Rs 10,000 crore. 

However, except for a few, the majority of these projects were stuck at various stages of implementation. Three more second-generation plants are coming up -- in Bathinda, Punjab (HPCL); Bargarh, Odisha (BPCL), and Numaligarh, Assam (Numaligarh Refinery).

OMCs are also set to come up with a green hydrogen roadmap soon. The government has already cleared an initial outlay of Rs 19,744 crore for the National Green Hydrogen Mission.