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Business News/ Industry / Energy/  NDA outlines blueprint for energy security
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NDA outlines blueprint for energy security

Govt to move quickly to revive coal mining, increase domestic production of gas, and find other ways to ease constraints on power companies

Photo: BloombergPremium
Photo: Bloomberg

New Delhi: The National Democratic Alliance (NDA) government, which completed six months in power on Wednesday, articulated its blueprint for energy security which guarantees adequate supply at affordable prices.

India’s energy woes have meant that the country has been hard-pressed to generate enough power to keep its economic engine chugging, and at a price that makes its manufacturing competitive.

Detailing the strategy at a joint press conference, Piyush Goyal, India’s minister for power, coal and new and renewable energy, and petroleum minister Dharmendra Pradhan said that the government would move quickly to revive coal mining, increase domestic production of gas, and, even as it does these, find other ways to ease the constraints on power companies.

“The country is craving for energy security and energy at affordable prices. India will be self-sufficient in energy," said Goyal. “National assets must be put to good use to keep energy costs affordable and address peak shortages."

The two ministers briefed reporters after a meeting during which they also discussed ways to revive 16,000 megawatts (MW) of power-generating capacity currently idle on account of want of gas, Press Trust of India reported. The measures discussed include ways to restructure the debt of these companies and making fuel available to them at a reasonable price by pooling imported gas with locally produced gas (or price pooling).

Of India’s installed power generation capacity of 254,049.49MW, power projects totalling 153,570.89MW are fuelled by coal and a capacity of 22,608MW is gas-based. Growth in the production of coal has been unable to keep up with demand—the power sector consumes nearly 78% of the domestic output. Many gas-based plants are idling because of declining production from Reliance Industries Ltd’s D6 block in the Krishna-Godavari basin, the country’s largest reservoir of the fuel.

The government is trying to rekindle waning interest in India’s hydrocarbon sector. The government’s plan to kick-start hydrocarbon exploration stems from broader concerns that India’s energy import bill of around $150 billion is expected to balloon to $300 billion by 2030.

Pradhan added that the government was ushering in a new federal compact between the Union and the states by engaging the states.

“This government doesn’t work in silos," said Goyal, adding that the Indian government works as an organic entity.

The government is working on a plan to supplement domestic natural gas, of which there isn’t enough for power generators, with imported liquefied natural gas , effectively pooling the prices of the two to ensure that companies don’t end up paying too much. The move, which has been spoken of in passing for several months now, is an attempt to tackle the severe shortage of gas in the country that has resulted in several power plants remaining idle. Mint reported about the proposal on 27 August 2013.

Responding to a question on this, Goyal hinted that an announcement could be coming soon.

The NDA government last week approved an outlay of 43,033 crore to fund an ambitious initiative to supply electricity through separate feeders for agricultural and rural domestic consumption, aimed at providing round-the-clock power to village households. In addition, the cabinet also approved spending 32,612 crore on an integrated power development initiative, which involves strengthening sub-transmission and distribution systems.

To resolve the coal supply impasse, the government plans to allot 74 of 204 coal blocks cancelled by the Supreme Court in September through a mix of auctions and allocations by 16 March. Of these, 42 blocks with a production capacity of 90 million tonnes (mt) are operational and 32 with a capacity of 120 mt are ready to be mined.

“It is not a revenue maximizing approach," coal secretary Anil Swarup had earlier said.

States such as Jharkhand and West Bengal stand to gain as much as 250,000 crore and 150,000 crore respectively over a period of 30 years.

Goyal added that India’s power generation capacity will grow by 50% because of the reforms process initiated in the sector and the coal block auction proceeds would help to develop eastern parts of the country.

PTI contributed to this story.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 27 Nov 2014, 12:46 AM IST
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