Prashant Ruia, Director – Essar Capital, in discussion with Shereen Bhan, Managing Editor – CNBC-TV18 at World Economic Forum Davos 2023. He spoke on integrated energy transition, energy security, Essar’s ESG focused investment plans for cleaner fuels and much more.
Shri Prashant Ruia, Director – Essar Capital, in discussion with Ms Shereen Bhan, Managing Editor – CNBC-TV18 at World Economic Forum Davos 2023.
Q) Many thanks for joining us here in Davos, so let me start by asking you about the second inning, so to speak, and clean and green seems to be the strategy going forward for you.
Prashant: Actually, first of all, thanks for having me. I think you named it perfectly. It is very much focused around the group itself. It is focused on the same sectors, which we have been involved in, but obviously with the new technologies, ESG focus, which are all necessarily around decarbonisation, energy transition, and moving fossil fuel business, or fossil fuel energy, which is what the world has been focused on for the last five decades into greener fields and greener energy. It’s comprised really of two parts, one part is new facilities, like renewable power, hydro power, whatever, nuclear, in some cases, but also in transitioning existing infrastructure into sustainable green infrastructure, so it’s actually comprising of both, and it’s interesting, because the general feeling was, you can just replace everything you have, or what we have built, but I think that’s now after the last one year, fairly clear that you also need to transition, and everybody has sort of recalibrated their expectations, and one of the themes, which I am picking up here at Davos is also very similar energy security, and then how do we get you know real?
Shereen: Absolutely. I think everyone is trying to figure out the adaptation roadmap at this point in time.
Q) Let’s talk about each of these businesses that you spoke off. On the first one, which is really new technology, and so on and so forth, are you looking at collaborations? Are you looking at partnerships? What is the future likely to hold?
Prashant: Absolutely. We are very much open. The way we have recalibrating the group is Essar Global, which is the holding company for the group, is now making investments, pretty much similar to private sector, private equity principles. We have got about 12 portfolio companies within the group, within the four sectors, and each of these companies are either transitioning into greener business, or we are looking at new investments, which are very much in that space. So it’s around, the investments are around energy transition for some of our existing assets, which include the refinery in the UK, which includes probably green ammonia coming out of India, to supply the hydrogen includes blue hydrogen, and… making Blue hydrogen in the UK, and then we are also spending a lot of time, building a gas transportation, L&G transportation business in India, which will bring down the emissions, CO2 emissions, and SOx and NOx emissions by nearly 40%, as compared to diesel transportation. These are for trucks. These are for heavy vehicles and heavy transportation, so it seems like that which we are working on going forward.
Q) What kind of investments are you talking about across each of these businesses?
Prashant: Investments are not massive. These are, you know, smaller bite size investments, and these are not very large, Greenfield projects, like what we have done in our previous two decades. So these are smaller investments. The energy transition, for example, is about 3 billion dollars over the next 5-6 years, but they are smaller projects. These are not… this is not one big project, right, and then each and every one of those projects, has investment plans, and we are going to look at them one at a time, but these are projects which get completed in let’s say, 18 months to 24 months, not five years.
Shereen: So they are not long gestation, or high capital intensive projects at this point in time.
Q.) Where are the opportunities? You spoke a little bit about hydrogen, for instance, I mean, the Indian government has released its Hydrogen Mission Plan to incentivise the use of hydrogen. But, how aggressively are you targeting that space?
Prashant: It’s very interesting. First of all, the government of India has come out with a very interesting policy. I think it will support both manufacturer of equipment, electrolysers, battery, storage, all of these things, and also the actual making of hybrid, and it’s a good shot. It’s certainly not going to be enough, because India requires a big canvas if you are going to move towards the hydrogen economy, but we are looking at it slightly differently. Our idea of building a hydrogen project of one gigawatt is to actually export it to the UK, which is where we think we can do some captive. It’s largely a captive requirement. So, we are looking at it more from an export perspective, at least for now. Well, I think many of the other domestic players are looking at it more for changing the domestic market, which is also a massive opportunity.
Q.) Captive and export to start with, but is that likely to be the beginning or is that what the aspiration is for you?
Prashant: I don’t know where the time is going to go, where things are going to go. But this is a, it’s a substantial project by itself to start with, and we would rather do something, not as big as many others are talking, but rather do something, deliver it, get it on the ground, get it operational, then we can always talk about what more we can do going forward.
Q.) Let’s talk about the milestones that you have to be able to achieve over the next 12 to 18 months as far as each of these businesses are concerned.
Prashant: Well, milestones, it’s tough to say, because these are projects, which are under development. We have been working on them for the last 2-3 years now. It’s not something which we have started today. We are probably talking about it now, but we started working on these projects a couple of years back, and we are really looking at seeing how we can get these projects up and running between the year 2025 and get it operational by December 25, is what we are working towards. It’s obviously linked to a lot of regulatory things still, in terms of approvals, in terms of policy, in terms of various things, but we believe, if we can do this, then we will be amongst the early players in the industry.
Q.) Let me end, by asking you about the outlook that you are picking up here in Davos. Business sentiment, is it bit pessimistic cautious depending on which company you are speaking to and which part of the world that company comes from, but what’s the sense that you are getting?
Prashant: Well, I think, it’s a bit of a mixed bag. So, first of all the positives, if you are coming out of India, then clearly, I think India is really in the sweet spot from an investment destination, supply chain options. Obviously, the technology, IT business that has been very strong, so India is obviously in a very, very strong position, and I think will attract a lot of investments going forward, but if you are coming out of Europe, then generally the situation is quite difficult. Their inflation is very high, and their investment sentiment is quite low. So, it depends where you are coming from. Chinese are not that much represented here this year, so we really don’t know where they are coming from, though there is talk that now they are wanting to open up and re-engage, get back in the game, but the time will tell. Shereen Yes, the time will tell. Well, Prashant, thanks very much for stopping by. It was great to speak with you after a long time. I appreciate your time here in Davos. Thank you very much.