New Delhi: India, which is highly dependent on imports to meet its energy demand, is taking its first steps towards evolving a “long term national energy security policy".

A committee of secretaries (CoS) headed by cabinet secretary Ajit Seth will meet on Wednesday to discuss the initiative. The other secretaries in the CoS include those of Planning Commission and the ministries of power, coal, petroleum, environment and forests, economic affairs, new and renewable energy, and law.

India, the world’s fourth largest energy-consuming nation after the US, China and Russia, accounts for 4.4% of global energy consumption.

“We don’t have a long-term energy security policy in place. What we have (at the moment) is an integrated energy policy (IEP), which was finalized in 2007. The world has changed (since)," said a senior government official who spoke on condition of anonymity.

A second government official who also didn’t want to be identified confirmed the move to evolve a long-term national energy security policy.

According to India’s IEP finalized in 2007, “The challenge is to ensure adequate supply of energy at the least possible cost. Another important challenge is to provide clean and convenient ‘lifeline’ energy to the poor even when they cannot fully pay for it, as it is critical to their well-being. Therein lies the importance of an effective and comprehensive energy policy."

Experts welcomed the move to draft a long-term energy policy.

“I believe an ‘overarching’ energy security policy is critical to India’s future. In fact, this is long overdue. India needs to accurately assess its domestic sources, maximize recovery and production, and look for access to primary fuel assets globally. The nature of the industry implies that the scenarios that could play out in 2030 are impacted by steps that we take today, unless we lean heavily towards acquisitions of producing/near production assets, which come at a much higher cost," said Kaustav Mukherjee, partner and director at Boston Consulting Group.

The mandate for the CoS to evolve a long-term national energy security policy comes in the backdrop of India’s high import dependence—80% of its crude and 25% of its natural gas consumption is imported.

The country’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) now to around 1,500 mtoe, according to India’s oil ministry.

B.K. Chaturvedi, member, Planning Commission, said, “One of the things which we discussed in the Integrated Energy Policy (IEP) was energy security. And in that we discussed all sorts of things about providing minimum electricity to the population, investing abroad, having a committee presided over by the then finance minister for facilitation of acquisition of such assets, be it in the case of oil, gas or coal, in integration with the MEA (ministry of external affairs) and others for providing any help if required."

India’s bid to secure overseas energy assets have not met with much success. Recently, state-run ONGC Videsh Ltd’s (OVL) $5 billion bid to buy Conoco Phillips’ 8.4% stake in Kazakhstan’s Kashagan offshore oil field, the world’s largest hydrocarbon development project, went nowhere after the Kazakh government which has the right of first refusal on the sale, exercised it.

And OVL’s $2.1 billion acquisition of a stake in Imperial Energy’s Siberian deposits hasn’t been as successful as the initial projections estimated. Till now, state-owned firms have invested 64,832.35 crore on overseas energy assets, according to India’s petroleum ministry.

India has a per capita power consumption of 700 kilowatt hours, less than one-third the global average. But this will change and India, China and West Asia together will account for 60% of energy demand by 2035, when the price of imported crude will be $215 a barrel in nominal terms, the International Energy Agency said in its World Energy Outlook 2012.

“The policy, when it comes into existence, should address the ‘energy needs of India’ in a seamless and comprehensive manner. The current silos of coal, oil and gas, renewables, need to be considered concurrently for collective potential and needs. The policy, in addition, should address the pragmatic considerations of manpower needs (including re-skilling, re-tooling), capital needs, technology needs while ensuring environmental concerns are not sacrificed at altar of economic gains alone," BCG’s Mukherjee said.

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