In September last year when Essar Energy had completed upgrade of its refinery but its power projects were plagued with problems, billionaire brothers Shashi and Ravi Ruia brought on board Sushil Maroo, a power sector veteran, as the firm's chief executive. In an exclusive interview with ET, Maroo shares the company's plans of consolidation, hopes of expanding oil retailing business and his expectations from the new government. Edited excerpts:
How do you view the BJP-led government at the Centre and what are your top recommendations for your sector?
There are great expectations from the new government and their initial steps have given us a lot of optimism. The power sector has been completely paralysed in the past and there is a need to expedite clearances and approvals.
The government should use technology to map the entire country and upfront categorise areas on the basis of clearances needed. We have the fourth largest reserves of coal but we end up importing because Coal India BSE -2.29 % is unable to support the needs of the country.
Mining needs to be opened to the private sector; only then will the productivity rise and prices fall.
India needs to come up with an integrated plan for the power sector to ensure that development in generation is supported by development in mining, transmission and infrastructure. At Essar, we are unable to run our power projects at optimal levels either due to issue of clearances or fuel supply.
We are hoping government resolves these issues soon so that we can generate more power. What about the oils and gas sector?
The gas pricing notification should come out clearly and fast. Going ahead, competitiveness of a country would depend on its energy cost. The government needs to work on a comprehensive plan to reduce energy cost.
Also, we have come very close to diesel deregulation and we hope it comes through. Private retailers need a level-playing field. What could be the next growth area in oil and gas business?
We are hoping for the opening of the retail segment for diesel. And as and when that happens that will be the next place where we would want to grow. We have 1,600 petrol pumps and we are working on a strategy to increase our footprint. What has been the rationale behind de-listing of Essar Energy from London bourses and plans to de-list Essar OilBSE 4.97 % in India? Would you be de-listing other Essar entities? What are the challenges going ahead?
I would not like to talk about delisting right now. All I want to say is that we are in the process of consolidation. We have had several challenges in the past. Now we hope for better times. The worst is behind us. Vadinar Refinery has been reporting robust high gross refining margins (GRM). Is this sustainable?
We have benefitted from the high complexity that we have built at Vadinar and there was some forex gains as well. There are so many dynamic factors in the free market that it is difficult to predict margins.
But there is intense completion from US-based refineries since they are not exporting crude and are in the process making huge profits. There were expectations that a fall in demand for crude by the US after the shale gas boom would lower prices...
Prices are unlikely to fall. Brent crude oil prices fell from $ 115/bbl to $100/bbl but it's again inching towards $ 115/bbl. While demand from the US may have fallen, geopolitical factors have ensured that prices don't fall.
The crude oil market has been impacted by disturbances in Iran, Libya, Syria and now Iraq. It is in the interest of the US economy if the global crude prices remain high as they are recovering with the aim to keep their own energy cost low.
In my opinion the biggest problem India will face with respect to inflation would be due to poor monsoon and high crude prices.