Engines of growth and transformation: How India’s energy PSUs rewired themselves

The article was first published in The Economic Times Edge Insights.com on January 30 2026. Please click here to read the article.

India’s public sector energy companies were often spoken of as symbols of stasis that characterised the economy – too large to fail, too slow to change, and too bound by bureaucracy and procedure. Yet, somewhere between a smoky kitchen in rural India switching to LPG, municipalities replacing dimly glowing incandescent bulbs with LEDs, and a fossil heavy electricity grid now absorbing large quantities of solar and wind, that narrative has quietly given way over the past decade.

The last 10–12 years have not been kind to complacent energy companies anywhere in the world. Volatile commodity prices, climate pressures, technological disruption, and changing consumer expectations have upended business models. Many of them have found it hard to stay on course. For India’s energy PSUs – IOCL, BPCL, HPCL, ONGC, NTPC, Coal India and others – this was the period of reinvention, re-definition, and positive momentum.

The Paris Climate agreement in 2015 unleashed a new wave of thinking on clean energy. Various international energy organisations have reacted differently – some defensive, some in denial and others blowing hot and cold. This was not entirely unexpected because it is hard for traditional capital heavy and operationally complex companies to reinvent themselves and compete with nimble new age counterparts. India’s public sector energy giants reacted differently. They acted with a sense of purpose to deepen their commitment to their traditional businesses but also opened doors for the new. In doing so they walked the tightrope between executing policy goals of the country, embracing the emergent opportunities and maintaining commercial discipline. What unfolded since then is not just operational scaling, but a deeper transformation in purpose, capital allocation, and engagement with people.

The energy PSUs grasped the unique nature of the opportunity and that there was room for many new businesses. In essence they embraced what has since been coined as “and ” instead of “or ” strategy. They were less affected by ideology as compared to many global compatriots. That openness and faith is now showing in the commercial outcomes, making them both feared and respected as competitors.

Tracing the development of the PSUs over the last decade several inflection stages become apparent. Through these stages the organisations have acted, learnt and evolved.

The first inflection: Energy as a public good (2014–2018)

With the launch of Pradhan Mantri Ujjwala Yojana (PMUY) in 2016, India’s oil PSUs became frontline agents of social change. Suddenly, IOCL, BPCL and HPCL were no longer just selling LPG cylinders; they were delivering dignity, health, and time–especially to women. Over the next few years, tens of millions of households moved away from biomass fuels. This was a logistical marvel, backed by rapidly developed backbone that delivered unprecedented access to clean energy where it perhaps matters the most – the kitchen. In the event it was not just about transitioning to clean energy but social transformation on a mega canvas.

Almost in parallel came UJALA, the world’s largest LED distribution programme. By flooding the market with affordable LEDs, Energy Efficiency Services Limited (a PSU joint venture) didn’t just reduce electricity bills–it permanently altered India’s lighting economy. Access improved, emissions fell, and energy efficiency came to the households. The simultaneous expansion of electricity services to every corner of the country through the Saubhagya program. In just two years nearly 2.5 crore unelectrified households got hooked on to the electricity grid, creating permanent access to modern energy.

The second inflection: Seeding transformation (2019-21)

Around 2019, digital transformation became the currency across segments of the economy. Unlike financial services, energy sector is dominated by physical assets, and digital transformation is at times perceived as a lesser imperative. To their credit however, the energy PSUs were quick to see the potential to bring rapid improvement in the ways of working.

The digital evolution of energy PSUs is less talked about but has nonetheless been real. A series of digital programs initiated in this period are now witnessing their second and third waves, slowly but surely transforming the operations culture. The slowness of human processes in the organisations and the fabled bureaucracy was significantly overcome by the rapid induction of digital technology. Refineries became further data-driven. Predictive maintenance, real-time optimisation, AI-led logistics and automated trading desks entered spaces once dominated by manual decision-making. Fuel retail operations witnessed massive digital enablement, coupled with the rewriting of thousands of accompanying processes to deliver outcomes at unprecedented scale and speed.

The pandemic stress-tested these systems. Fuel demand collapsed, logistics were disrupted, and price volatility surged. Yet the system held and indeed innovated to meet the demands of the time, helping evolve contactless payments and remote operations. Energy PSUs absorbed shocks, ensured continuity, and demonstrated why resilience, not just efficiency, is the true test of infrastructure. Through the pandemic energy production and delivery systems remained rock solid and ushered in new paradigms of digital operations.

The third inflection: The energy transition becomes real (2021–Present)

For years, clean energy sat on the periphery of PSU strategy – important, but not existential. That changed decisively in the early 2020s. Energy transition is capital intensive. Access to capital at scale and relatively lower cost of capital form a key advantage for PSUs. On unit output basis many forms of clean energy is more capital intensive than conventional energy technologies, which in themselves are extremely capital intensive. Few organisations in the country had the capability to invest at scale in both traditional and new energy forms, which the PSUs did to build competitive moats including in segments like renewables where they were anticipated to have serious limitations due to perceived lack of agility. Several PSUs turned that premise on its head, revamping delegation of powers for quick decision making. Some of those new businesses have been subsequently listed on capital markets, unlocking massive value and creating public wealth. More such clean energy offshoots are slated for listing in the coming years.

Why this story matters

Perhaps the most underappreciated shift has been cultural. PSUs are hiring differently, training differently, and thinking differently. Technology partnerships with startups, academia, and global majors have increased. Younger talent is being exposed to renewables, digital systems and sustainability metrics alongside traditional engineering.

At the same time, capital expenditure remains muscular. Pipelines, grids, ports, storage caverns and tank firms, renewable parks and charging networks are being built with an understanding that energy security and energy transition must progress together.

India’s energy transition cannot be outsourced. It requires institutions with balance sheets deep enough to absorb risk, networks wide enough to ensure inclusion, and mandates broad enough to think beyond quarterly returns. Over the past decade, India’s public sector energy companies have proven that scale and reform are not opposites. They have modernised without abandoning their social contract, created shareholder value without forsaking public purpose, and embraced clean energy without destabilising supply. They are no longer relics of the command economy. They are evolving into system integrators for a complex, low-carbon future.

The transformation is far from over, and challenges remain. While the change has been discernible there is surely room for greater capital efficiency and leaner operations as the velocity of technology deployment increases. Also, as the country seeks full value chain play in the energy sector, PSU contributions must go beyond efficiently executed projects and operations, into core technology development in critical application areas. It is a security imperative for India to create its own intellectual property stack and a full delivery ecosystem. The bar in the future will thus be even higher. It will be a tough task for these organisations, stretching them well beyond their newfound comfort zones once again.

However, well begun is half done. This is a good time as any to recognise the deep change that has happened over the decade past. In a world searching for universal and affordable energy access and credible energy transitions, India’s PSUs are quietly offering a model: reform from within, scale with responsibility, and transition without exclusion.

That may turn out to be their most valuable export yet.