Securing the Energy Future for India

Adequate availability of energy is one of the basic requirements for faster economic growth.To make growth truly inclusive, access to energy in rural areas and to urban poor has to be ensured. Ensuring certain minimum level of energy consumption for everyone is a critical requirement for providing basic amenities required by everyone. The overall availability of energy would need to be increased substantially to meet these twin objectives and to enable a sharp reduction in energy demand and supply gap. It implies that the pace of addition of power generation capacities would need to be stepped up. The addition of new capacities in earlier Plans has been quite inadequate. The position will improve in 11th Plan.These initiatives will need further support with substantially large investments from the
private sector. Specific measures to incentivize them to step up the pace of investment and provide competition in the power sector will need to be taken up. Development of energy markets will be promoted as part of this overall policy to help this process. This will ultimately lead to greater competition and better prices for consumers. With limited fuel resources, development of energy-efficient supercritical thermal capacities would be given a very high priority. The Plan will aim to develop at least half the thermal capacity through such energy efficient measures. Simultaneously, policies on setting up new nuclear power capacities and development of fast breeder reactor technologies would be continued.

Increased pace of power capacities addition will be unsustainable without a simultaneous thrust on reforms in the power distribution sector. In spite of extensive discussions,emphasis in various fora and conferences and assertions by all stakeholders for undertaking measures for improving distribution efficiency, the T&D losses continue to be unacceptably high. Governance in the power sector, particularly in the distribution network of the utilities, has been quite poor. The regulatory structure in the States has not enabled any significant improvement in the functioning of the utilities. Revision of tariff is not taking place regularly and financial losses of distribution utilities are mounting. The problem of governance deficit in the power sector would be addressed in the Plan with specific policy and statutory measures. Reforms would be taken on a very extensive scale to promote private investments in transmission and generation. Some of the basic requirements of the distribution utilities like universal metering and energy audit would be addressed through this.

Large addition to power capacities and higher growth rate of the economy would require substantial increase in availability of energy fuels—coal, gas, and uranium. To develop domestic production of coal, which is the primary source, while taking care of the environmental concerns, policies will be developed for exploitation of substantially large number of coal deposits. Development of underground mines will be especially supported.Availability of domestic coal will need to be supplemented with increased imports to meet the domestic market demand. Necessary infrastructure for improving rail-road connectivity and coal jetties at port will be expanded and a policy evolved for effective and timely
imports. This will include development of long-term contracts. For meeting the requirements of the transport and other sectors, development of other domestic energy sources will be taken up through further exploration of oil and gas with the help of international competitive bidding. Exploration policies will be further refined to attract the major global oil players, international investors and technologies. Shale gas would be explored to ensure larger availability of gas. International cooperation and expertise would aim at quick exploration of all basins for this form of natural gas.

India is becoming a major oil importer and will soon become the third largest importer of oil next to USA and China. Technology innovations to improve efficiency of fuel use by automobiles, developing Mass Rapid Transport Systems for moving passenger traffic and also shifting goods transport from road to rail would result in large savings of oil and reduce import dependence. The 12th Plan should aim at developing an efficient public and freight transport system.

Major investments to get access to fuel sources located in other energy resource-rich countries will be taken up as an integral measure of overall government economic policy to strengthen energy security. This will cover coal, oil, gas reserves and uranium. Both public and private investors will be encouraged to acquire such assets and develop supply sources in different parts of the world to augment domestic availability. International gas resources from liquefied natural gas (LNG) and through pipelines would supplement the energy requirements and be negotiated. The current LNG infrastructure would be further
developed to access this. Domestic gas pipeline network will be expanded and a national gas grid developed. The present policy of promoting investments in private sector in refineries and pipelines for transporting both oil and gas would continue. The overall oil pipeline network for availability of high quality transport fuels will be augmented as new refinery capacities come up and this will help provide a good export potential and LPG for cooking and availability of quality fuels for transport.

Universal access to power for lighting and cooking energy is a basic requirement of all civilised societies. There are large gaps in the rural infrastructure of these energy sources.In spite of electrification of a large number of villages, a very significant number of habitations continue to remain uncovered with grid network. Even where electrification has been extended, large number of families have not availed of such connections. Some of them do not have enough resources to get access to power. They need financial support to Universal access to power for lighting and cooking energy is a basic requirement of all civilised societies. There are large gaps in the rural infrastructure of these energy sources.In spite of electrification of a large number of villages, a very significant number of
habitations continue to remain uncovered with grid network. Even where electrification has been extended, large number of families have not availed of such connections. Some of them do not have enough resources to get access to power. They need financial support to get this access and continue with it. Similarly, large segments of rural population have no access to energy sources for cooking through LPG. They are dependant primarily on biomass. Cooking from this biomass has enormous harmful effects, particularly for the health of women. The Plan would hence aim at supporting and developing rural marketing network for LPG to provide a minimum access to all families. The Plan would also aim to develop modern research through international network for improving cookstove, which can use biomass for cooking and have least harmful effects and are environment-friendly.

Fuel subsidies are unsustainable for long periods. Given the large step-up in fuel needs,pricing of coal and other fuel sources would move towards market-based pricing.Accordingly, price of oil products, coal, gas and other energy sources will gradually converge towards international market price. While support to below poverty line families would be provided through a regime of direct subsidy, the overall pricing structure would be market-based.