We are sowing the seed for the future, says L&T's Subramanian Sarma

 

Subramanian Sarma, deputy managing director and president at construction and engineering powerhouse Larsen & Toubro (L&T), oversees the company's fast-growing hydrocarbon, onshore and offshore, carbonlite solutions, green and clean energy, asset management, and offshore wind businesses. In an interview with Jaden Mathew Paul and Dev Chatterjee, Sarma shares insights into L&T’s vision for hydrogen and clean energy ventures, and outlines the company’s strategy to transform India’s green energy sector. Edited excerpts:

 

With US President Donald Trump’s stand on the tariff war, how do you look at the current environment in India for the energy business?

 

I do not see any red flags despite all the talk of tariff uncertainty and fluctuation in oil prices. In the long term, there is no disruption and we are bullish about the Indian economy. The India-Pakistan tension following the Pahalgam massacre is now over without any major impact. Hence, the sentiment is positive. A strong economic growth in India means more demand for energy. India is now the largest consumer of energy after the US, and we have even surpassed China in terms of energy imports, particularly oil and gas.

 

A few weeks ago, we had a meeting with the Ministry of Power and the minister was talking about adding 30 gigawatt (Gw) of additional thermal power capacity in India as the demand is rising.

 

L&T is investing a lot in clean energy initiatives... what is the status of these projects?

 

We are in the entire spectrum of energy, from grey to all the way green and all the shades in between. This is very fortunate because we have built that platform over the years. Therefore, we are able to sort of address all the needs. We will continue to pursue opportunities in oil and gas, quite a sizable business now is in hydrocarbons. We are also looking at carbon capture projects, where customers are coming up with tenders. We have already made an announcement that we have won the first carbon capture project in West Asia, which is now in the early stages of execution. This will provide us with a good track record. 

 

Can you give us more details on L&T's green hydrogen and green ammonia projects?

 

Green hydrogen and green ammonia are an evolving business and we are sowing the seed for the future. This definitely is a business which is going to grow in the next three-to-five years. That's the time horizon worldwide. Today the price difference between grey and green energy is quite wide. So, the customers have to be prepared to pay the premium, or rely on government subsidies. But over a period of time, the prices will start converging. And then it will have a massive adaptation. Therefore, we have to be prepared to make use of that opportunity.

 

We are also building electrolysers and have acquired land in Kandla for setting up new facilities. We have started a pilot plant in Hazira that is producing hydrogen, and we are testing different electrolysers, collecting huge amounts of data, and improving our knowledge base. Whenever a big commercial-scale opportunity opens up, we are ready to hit the ground running.

 

What is the status of your talks with Indian companies in terms of green energy adoption?

 

I think Indian refineries are most advanced in this energy adoption. We are already involved in Indian Oil's Panipat Green Hydrogen project. That is the first one to come and we are waiting for the award of the project, which should happen anytime. It is a build-own-operate project. We will have to supply green hydrogen at a predetermined price. It is a 25-year contract, with exit options available for both. We will have a steady revenue stream and a return on investment. A similar model is being followed by other refineries like BPCL and HPCL, and a lot of tenders are out. The government has also encouraged them to set up and blend into grey hydrogen. Steel is mostly in the private play and they have to find a good market for green steel as green hydrogen today is expensive. There will be an extra cost on steel. If they find a premium in their end product, steel companies will go for it. There is a lot of dialogue happening but nobody has made any serious commitment so far. But it will happen in a year or two.