Indian Oil Corp.’s Terra Clean in talks to buy 50% stake in Fourth Partner Energy
The deal, if it goes ahead, would be the state-run oil marketing company’s first acquisition in the green energy space. It will be a mix of primary and secondary share transactions and will involve stakeholders of Hyderabad-based Fourth Partner Energy (World Bank’s International Finance Corp (IFC), Asian Development Bank (ADB), Germany’s Deutsche Investitions- und Entwicklungsgesellschaft (DEG), TPG Capital’s RISE Fund and Norway’s Norfund) will provide a partial exit.
“Indian Oil’s renewable energy subsidiary Terra Clean Ltd is in talks to acquire a stake in Fourth Partner Energy. But nothing has been finalized yet,” said one of the two people, who did not want to be named.
Terra Clean was incorporated as a wholly-owned unit of Indian Oil in May 2024 and plans to install 5.3 gigawatts (GW) of renewable energy capacity.
Given the changing hydrocarbon landscape, Indian Oil is looking at acquisitions in the clean energy space within the framework of ONGC NTPC Green Pvt Ltd’s National Investment and Infrastructure Fund-backed acquisition of Ayana Renewable Power Pvt Ltd. The move by state-run domestic energy companies comes from global oil companies including Shell Plc, Total, Thailand’s PTT Group and Malaysia’s state-run Petronas unit Gentari. Sdn Bhd has a presence in India’s green energy sector.
A spokesman for Fourth Partner declined to comment.
An Indian Oil spokesman did not respond to emailed questions Monday evening.
“We have no comments to offer at this stage,” Terra Clean chief executive officer (CEO) Atul Parmar said in an emailed response.
“For privacy reasons, we cannot comment on business activities in individual cases,” a DEG spokesperson said in an emailed response. he said.
“Due to the speculative nature of the issue, I am afraid we will allow it,” an IFC spokesperson said in an emailed response.
Spokespeople for TPG, ADB and Norfund declined to comment.
Overseas operations
The Fourth Partner has 1.5 GW of installed green energy capacity, and 2 GW of wind and solar energy projects are being developed. With operations in Vietnam, Bangladesh, Sri Lanka and Indonesia, Fourth Partner plans to reach 3.5 GW installed capacity by 2025. It was founded in 2010 as a solar component and engineering, procurement and construction company.
IFC, ADB and DEG announced a $275 million equity investment in Fourth Partner in August last year. IFC invested $125 million, ADB donated $100 million, and DEG donated $50 million. Norfund is the largest investor in Fourth Partner with an investment of $145 million.
Indian Oil plans to develop 31 GW of renewable energy capacity by the end of this decade and is putting the building blocks in place. In response to a question about ONGC and NTPC’s acquisition of green energy companies, Arvinder Singh Sawhney, chairman and managing director of Indian Oil, said in an earlier interview. Mint: “Yes, we are also alert and will move forward.”
In May this year, Indian Oil ₹1,086 crore in Terra Clean to develop 4.3 GW of renewable energy capacity. The company had previously imposed sanctions. ₹1,303.75 crore to develop 1 GW green energy capacity through Terra Clean.
In 2023, the company formed a joint venture with NTPC Green Energy Ltd, named IndianOil NTPC Green Energy Pvt Ltd, to create renewable projects to meet the 24-hour energy requirements of its refineries.
Indian Oil has an annual refining capacity of 70.25 million metric tonnes (mtpa) with its 10 refineries. Taking into account the additional annual capacity of 10.5 mtp of the group company Chennai Petroleum Corp., it has a total capacity of 80.75 mtp, corresponding to 31% of the country’s total refining capacity of 258.1 mtp.
C&I projects
Fourth Partner caters to the commercial and industrial (C&I) segment, which has attracted strong interest from investors, given the regulatory environment that supports the space with rules that allow large power users to obtain energy from the open market rather than the more costly grid. C&I projects are also protected against risks such as state-run energy distribution companies restricting energy purchases.
Additionally, the implementation of time-of-day tariffs for consumers in the large C&I category by state electricity regulatory commissions has helped sustain investor interest. In time-of-day tariffs, the cost of electricity varies depending on the time it is consumed (peak, off-peak, or regular hours).
Considering the scale of opportunities offered by the field, there are many green energy deals available in India. India has an installed renewable energy capacity of 245 GW, of which 116 GW and 52 GW are solar and wind energy, respectively.
India plans to add 50 GW of green energy capacity annually to reach 500 GW by 2030. Given the country’s trajectory towards green energy and its goal of net-zero emissions by 2070, the plan is to add 1,800 GW of renewable energy capacity by 2047 and 5,000 GW by 2070.
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