Agree but with a slightly different perspective.
The exploration and production or coal businesses are very profitable at normal commodity prices. Also these businesses tend to have high entry barriers. You need lots of capital, highly qualified talent and access to mineral reserves which are typically owned by state companies in India.
But renewable is going to be a different ballgame. With Tata, Adani, Ambani, JSW etc getting into this space, going will be very tough for PSUs who don’t have the required execution skill, talent and culture to compete. Unlike Oil and Coal businesses where PSUs have had some entrenched advantages and also head start, in renewable, they will be starting from scratch and learning these businesses afresh without any real advantage of access to reserves.
Plus oil and coal commodities may not see the same demand but they will still be produced for next 50-60 years according to even most anti-fossil fuel forecasts. Which will make it even more difficult for companies like ONGC and CIL (especially the latter) to transition into renewable as they will have to get extremely efficient with their capital allocation and execution (and most of the PSUs are very bad at both).
We have already seen that with BP’s and Shell’s of the world, who after tall proclamations of getting out of fossil fuel business, have tempered their excitement and are now refocusing on their cash cow oil businesses. And these are world class companies, far superior to ONGC or OIL in terms of their capital allocation, technological knowhow and execution quality.
Bottom line, energy transition for sure is a reality but I don’t think winners in that space will be from PSU pack. I would bet on Adani, Tata or Ambani to make money for their investors. ONGC, NTPC, OIL will survive for sure, but not sure if they will thrive.
P.S.- By the way world is not going to run out of oil and gas reserves in next 50 years or even 100 years, especially the Middle East. There are plenty of reserves and yet more to be discovered. On the contrary experts are claiming a stranded oil scenario where world is going to leave a lot of oil and gas in the ground with transition to cleaner energy.
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