EV biz to be decided after large-scale demand, says Sanjiv Singh of IOC

Sanjiv Singh, chairman, Indian Oil Corporation (IOC), during a candid chat with Anurag Shah of Zee Business, talks about the outlook on crude prices, marketing margins of IOC amid volatility, inventory losses and capital expenditure, among others. Edited Excerpts: 

Can you provide an outlook on crude prices and marketing margins of IOC at a time when OPEC is talking about production cut?

It is not a wise decision to make predictions related to crude prices, especially when in the past few months, we have seen the way the prices went up to $80/barrel and then saw a sharp decline. We have also seen considerable fluctuations in the prices of commensurate and other products. There is a slight increase in crude prices and it is difficult to say anything on it as Opec (Organization of Petroleum Exporting Countries) and Opec-plus countries have objectives and their projections and commitments are related to it. There are many other countries, apart from these, which are major producers of crude and their numbers do have an impact on the global trends. We are watching the trends and current crude prices stand around $60/barrel. So, let’s see how it happens. 

Did these fluctuations led to inventory losses? Do you think that gross refining margins (GRMs) will continue to decline from here?

Inventory loss, gain or variations are dependent on price fluctuations. We faced huge inventory losses in 2014 after there was a sharp decline in crude prices. Thus, the inventory loss and gain nullify each other, when they are seen in the long term. The decline in net prices in the last quarter will have an impact on our inventory. Physical performance of the company and refineries along with product margins – the difference between product and crude prices – have a major impact on GRM. Inventory losses and gains are also a factor to it. When it comes to companies than the performance of refineries and physical performance are under their control. And that is why I can confidently say that our refineries on physical basis are doing good, but prices, margins and inventory will have an impact on the GRM. 

Has IOC has met its capital expenditure target for the year?

Our capex target for the financial year stood at Rs 22,000 crore, which has been met proportionately, and I feel that we will be able to meet it by  the end of this fiscal. 

The three oil marketing companies are talking about adding 50,000 more fuel outlets in India at least when the future is of electric vehicles (EVs)?

The three companies, in the recent past, have advertised the number of fuel outlets. The advertised numbers are too high, if seen percentage-wise, the conversion/actual numbers get reduced over time. They also take time in being installed. Apart from this, the retail outlets that will be installed will not be left only as a petrol pump. In fact, we have several petrol pumps that are offering other facilities like CNG dispensing, among others. The future petrol pumps, amid push towards CNG and PNG, will be provided with several other facilities, but can’t say that EVs will be included in it or not. We haven’t set a model for it yet. Let’s see what pops up. But a pilot exercise has been started at places where EV charging is required at petrol pumps. The business model for EVs will be decided after it will be in demand on a large scale.