Every morning, Sanjiv Singh starts his day with a cup of green tea and a 10 km walk, followed by a quick breakfast. The Indian Oil Corporation (IOC) chairman doesn’t let anything come between him and his exercise regimen because that is what prepares him for a demanding day at work. The 58-year-old IIT-Roorkee graduate shows the same diligence in preparing IOC, the No. 1 company on the Fortune India 500 list for the ninth year running, for the future. Anticipating stricter emission standards, and a strong government focus on electric vehicles and alternative fuels, Singh is investing heavily in green technologies such as hydrogen fuel cells to make IOC a complete energy company. In an interview with Fortune India, Singh talks about his plans for transforming the company. Edited excerpts:

What is the future of fossil fuels in India? Many experts believe that by 2030, electric mobility will become a way of life, resulting in reduced demand for gasoline and diesel.

Let us look at mobility from the customer’s point of view. They want it to be economical and reliable. When we started driving two-wheelers, they were all two-stroke engines, giving a mileage of 35-40 km per litre; 40 km per litre was a dream. Today, the fuel economy has changed the game. Cars are extremely reliable. If you look at electric vehicles (EVs), technically they are extremely advanced. But there are issues, too. Let us look beyond emissions... look at the complete lifecycle—how are we generating electricity, manufacturing batteries, and how frequently are batteries being replaced and disposed of. EVs provide a wonderful alternative but how aggressively they come to India depends on each and every aspect that I mentioned. Infrastructure is also an issue for them. Our internal and global assessments indicate that internal combustion engine (ICE) cars will remain the major option for transportation at least for a few decades. In the automobile space, a lot of growth is happening, with a lot of urban families owning more than one car. Many people also want to move from two-wheelers to four-wheelers. However, hybrids can come in a big way since they don’t require charging. The electric motor takes care of the car when the ICE is the least efficient. But at higher speeds, it is the engine that kicks in and charges the battery.

What are the alternatives you are looking at?

There is a lot of work happening on hydrogen fuel cells, which requires hydrogen as input and water vapour is the only emission. It also does not have a storage issue like a conventional battery. The only challenge: the way we are producing it is expensive. We have a hydrogen dispensing unit in our research and development centre in Faridabad. We are running a trial bus service from Faridabad to Delhi using hydrogen fuel cells, in a tie-up with Tata Motors. Hydrogen can be produced from water; now imagine what can happen if we can use solar energy to produce hydrogen from water [by the process of electrolysis]. What can be better than that? EV is not the end of the journey. The other options are a little away from going commercial. But while we are looking at all these options, conventional engines are now extremely environment-friendly and efficient. A BS-VI diesel engine’s emissions are the same as that of a compressed natural gas (CNG) engine. So, when we talk about diesel engines, let us not talk about a truck which is 15 years old, but which will hit the roads in 2020.

“We strongly believe there is a greater opportunity for India in biofuel . It has the potential to help other stakeholders like sugarcane farmers. ”

You are setting up hydrogen-spiked CNG (H-CNG) stations. Can you throw some light on them?

CNG is normally 90% methane. When any hydrocarbon burns, it releases energy. Hydrocarbon with more hydrogen generates more energy. We have done a lot of lab trials and found that if we spike hydrogen in CNG itself, then the efficiency of the engine goes up. Hence, you require less gas and even the emission level goes down. We have seen that spiking up to 18% does not require any change in the car’s engine. We have developed our process. It is a small package unit which we will install in a retail outlet of a CNG station. When you use this HCNG, even BS-IV engines will produce emission levels matching those of BS-VI. If we have these solutions, then probably the conventional fossil fuels can also provide competitive answers to renewables, both in terms of environment and fuel economy. Within the next six-seven months, we will be running 50 buses in Delhi on H-CNG and rolling out these buses in as many cities as possible. Therefore, even conventional fuels will make a strong business case. There is enough space for everyone to be in this sector. The challenge for a company like us is to meet the growing demand while being prepared for the future. For H-CNG we have a global patent.

What about biofuels?

We are not a company only selling petrol and diesel or LPG. We are basically selling energy. We did a lot of work with the push coming from the rising crude oil prices. Biofuels are a very good option. If you see the past year, a lot of things have changed. Even the ministry has changed. Biofuels used to be with the new and renewable energy ministry, now it has been moved to the ministry of petroleum and natural gas. This shows the seriousness of the policymakers. We strongly believe that there is a greater opportunity for India in the biofuel space. It has the potential to help other stakeholders like sugarcane farmers. Sugarcane production is really high and sugar prices are really low but ethanol production is a way out. Earlier, ethanol could only be produced from molasses but now it can be produced from sugarcane juice too. Also, it fetches a higher price for the farmers. We can go up to 20% ethanol blending in fossil fuels; the national average in just 4%. But in states where there is a lot of ethanol, like Uttar Pradesh and Maharashtra, we have gone up to 10% blending. The restrictions on inter-state movement of ethanol are also gone. So, farmers get a good price, so do refiners, and we are able to reduce our crude oil dependence, as I don’t have to make that much gasoline. Pollution levels, too, are lower since the octane levels are higher.

What about biogas as an alternative to fossil fuels?

The third biofuel that people have ignored is biogas. We can make biogas from any kind of biowaste. The potential [in India] is close to 63-65 million tonnes, close to our total gas consumption. Even if we produce only 15 million tonnes, we can reduce our imports by 50%. The government has announced its National Policy on Biofuels-2018; we are partnering in that scheme. Look at the total business model of biogas. We intend to set up large plants. These plants are less capital-intensive than bioethanol and can be set up in half the time, in a decentralised manner. Big companies can set up their own plants; we encourage small players like village cooperative societies and farmers to set up their plants. We stand guarantee to lift all their gas. We have to monitor these plants, design them properly, and operate professionally. We have a strong bio-group who can support in designing, installing, operating, maintaining, and providing technical guidance. This gas has to be purified—to be brought up to 90% methane—so that it can be used as CNG. We are talking about 5,000-10,000 such plants. The country is building a lot of gas infrastructure. Suppose you put it into the gas grid. We meter it and put it into the grid and it can be used anywhere, not just in the kitchen. To start with we have signed MoUs with 18 biofuel producers and plan to sell this gas in our retail outlets, like CNG.

Image : Fortune India

Will you be financing people who want to set up these plants?

No, we will not. But we are giving a commitment to lift all that gas and it is on a pan-India basis. That itself is a very strong commitment. If you see from India’s point of view, every year our oil consumption goes up by 10 million tonnes. If we can produce 10 million tonnes of such gas, then I can hold my imports for some time, which changes the whole dynamics. The potential is huge and it involves a large number of stakeholders.

IOC has seen a lot of transformation in recent years. From refining and marketing, you have expanded to exploration and production. So, how will you describe IOC now?

We have always been an energy company. But now the energy field/ energy basket itself is changing. Accordingly, we are also changing. We need revenue, we need profit but we also need to be in the new areas. If I don’t refine crude efficiently today we cannot make money. We entered the petrochemical sector some 10 years ago. Now we are a very aggressive player because we realised that whatever happens the demand for petrochemicals will grow. The petrochemical industry is an important line of business for us, another is gas. While people see gas today as a source of fuel, I am seeing it as a molecule source for petrochemicals and other feedstock. Similarly, people see LPG as a fuel source. Once electricity is abundant, then LPG may become freely priced, since you may want to cook on electricity and not LPG. We also have the infrastructure to import and distribute LPG. I am confident that because we are ourselves working on these new things I won’t be dependent on one source. Technology will drive the future businesses.

What’s the current status of your electric vehicle battery business?

I can only say that we are working very aggressively on the conventional battery side. This is the lead-acid battery. Very soon we can offer a battery which can charge any vehicle in one-third of the time and can travel twice the distance for the same price. Today for an e-rickshaw driver, a lithium ion battery is extremely expensive. He needs a simpler option. For everything, lithium ion is not the answer. While we are working to improve the conventional battery, we are also working aggressively on other forms of batteries based on new chemicals, not just lithium ion. We are fairly fast in our development.

This was originally published in the Dec. 15 - Mar. 15 special issue of the magazine.

Follow us on Facebook, Twitter & YouTube to never miss an update from Fortune India. To buy a copy, visit Amazon.