Energy Markets & Technologies-revised1

7/27/2019 Energy Markets & Technologies-revised1

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ENERGY MARKETS AND TECHNOLOGIES IN INDIA

R.V. SHAHISecretary, Government of IndiaMinistry of Power

80% of global population lives in developing areas. Of the 6.0 billionpopulations, in the OECD countries the total number is approximately 1.2 billion North America (0.4), Europe (0.6), Asia Pacific (0.2). In the non-OECD countries,the population is the balance 80% and i.e. 4.8 billion consisting of Asia Pacific(3.2), Russia-Caspian (0.3), Middle-East (0.2), Africa (0.8) and Latin America(0.4). By the year 2030, the global population is projected to be 8.0 billion risingat the rate of 0.9% per year and in the year 2030, the OECD countries wouldconsist of North America (0.5), Europe (0.6) and Asia Pacific (0.2), the total being1.3 from the present level of 1.2 billion. The balance 7.7 billion would be in non-OECD countries. Therefore, during the period 2005-2030, the population rise inthe non-OECD countries would be higher than the population growth in theOECD countries. And, as a result, by the year 2030, the global population in theOECD countries would be a little more than 16% and the balance about 84%would in the non-OECD countries.

2. As regards energy consumption, 16% of the global population in theOECD countries, would consume, by the year 2030, more than 40% of energyand the balance about 84% of the global population in the non-OECD areaswould consume a little less than 60% of the total energy consumed in the world.

No doubt, during the period 2005 to 2030, the rate of growth of energyconsumption in the non-OECD countries would be higher than in OECDcountries and would vary between 1.3% in the Russian-Caspian area to 3.2% inthe Asia Pacific areas, as opposed to the rate of growth of energy consumptionduring this period in the OECD countries being in the range of 0.6% in North

America to 0.9% in the Asia Pacific region. Still as mentioned earlier, by the year2030, 16% of global population would consume as much as 40% of the energyand the balance 84% of the global population would consume less than 60% ofenergy. Providing access to adequate energy to their people is really a challengefor developing countries.

* Keynote Address in Global Energy Dialogue at Hanover (Germany) on April 25, 2006

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3. India is one of the countries where the present level of energyconsumption, by world standards, is very low. The estimate of annual energyconsumption in India is about 330 Million Tones Oil Equivalent (MTOE) for theyear 2004. Accordingly, the per capita consumption of energy is about 305

Kilogram Oil Equivalent (KGOE). As compared to this, the energy consumptionin some of the other countries is of the order of over 4050 for Japan, over 4275for South Korea, about 1200 for China, about 7850 for USA, about 4670 forOECD countries and the world average is about 1690.

4. In so far as electricity consumption is concerned, India has reached a levelof about 600-kilowatt hour (kwh) per head per year. The comparable figures forJapan are about 7,800, for South Korea about 7,000, for China about 1380, forUSA about 13,000, for OECD countries about 8050 and world average are about2430. Thus, both in terms of per capita energy consumption and in terms of percapita electricity consumption, India is far behind many countries, and as a

matter of fact, behind even the world average. Therefore, to improve thestandards of living of Indian people and to let them enjoy the benefit of economicdevelopment, it is imperative that both energy consumption and electricityconsumption level is enhanced. India is targeting a growth rate of 9 10%,having already reached a level of almost 8%. To sustain the double-digit growthrate for next 10-15 years, it would be essential that the level of energy availabilityand consumption, and electricity consumption in particular, is enhancedsubstantially.

5. In the profile of energy sources in India, coal has a dominant position.Coal constitutes about 51% of Indias primary energy resources followed by Oil(36%), Natural Gas (9%), Nuclear (2%) and Hydro (2%). To address the issueconcerning energy consumption, and more particularly, the need for enhancingthe energy supply, India has accorded appropriate priority to both - supply sidemanagement and demand side management. On the supply side management,while it is essential for India to radically expand the capacities on all the frontsand all the segments of energy, equally important is the need for efficientconsumption of energy for which a number of initiatives have been put in place.

6. On the supply side, the mis-match between demand and supply is solarge that India can ill-afford to choose one option in preference to the other. For

several years, in fact may be for next few decades, India would need to exploit allpossible options to create reasonably large capacity base on the energy side. Itneeds to expand manifold the coal production, extract through all possible means,the oil and gas reserves, wherever possible, resort to import of coal, acquire coaland gas reserves abroad, will need to continue substantial dependence on importof oil, and exploit fully the large hydro electric potential which is of the order ofover 1,50,000 MW. Only about 32,000 MW i.e. about 20% of the hydroelectricpotential has been exploited so far. Increase in the capacity base of power

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generation through dependence on the coal reserves of the country, which are ofthe order of 200 billion tones is inevitable. Nuclear programme has proved to beeffective and successful. After initial teething problems in mid eighties, fromearly nineties, the nuclear power plants have demonstrated to be utilized atsubstantially high level of availability and efficiency and this is one of the

important options that India is pursuing. Gratifyingly, a number of companies inIndia have discovered huge gas reserves, both on the Western, and moreparticularly, toward the Eastern coast. Besides, a number of LNG terminals havealso been developed and are being developed so that the use of gas could besupplemented through import of Liquefied Natural Gas. India is one of the veryfew countries which has been successful in employing wind turbine technologyand today of the total capacity of 1,25,000 MW in the country about 5% isconstituted by the various non-conventional sources of generation, wind beingthe largest contributor.

7. On the Demand Side Management, there exists a substantial scope. On

the basis of random sampling studies conducted on various segments of energyconsumption, it has been established that over 20% of energy is wasted becauseof in-efficient consumption. The Government of India enacted a legislation calledEnergy Conservation Act in the year 2001. The Bureau of Energy Efficiency(BEE) has been put in place in pursuance to implementation of this law. TheBureau has formulated a number of major action plans to make significant denton various segments of energy consumption in the domestic sector, in theagriculture, in service group and in manufacturing sector. The programmesinclude Standards and Labeling of energy consuming gadgets, setting andenforcing consumption norms, developing energy efficient building codes, energyaudits of large buildings etc.

Now, let us examine the various segments of the energy sector and focus onthe present status, the areas of challenges and the future perspective.

Coal Sector

8. As mentioned earlier, coal constitutes the most dominant constituent ofthe energy sector. In the year 2005-06, the coal production was over 370 milliontones. Power Sector consumes almost 80% of coal that is produced. India has

large coal reserves of the order of 200 Billion Tones, most of these are high ashcontent coal in the calorific value range of 3000 kilo calorie per kilogram to 4,500kilo calorie per kilogram and ash content in the range of 30 45%. Using thehigh ash coal for the power sector is a major challenge, from the point of view ofachieving high level of efficiency of consumption, and more particularly, from thepoint of view of environmental management due to fly ash emissions.

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9. So far as the institutional framework is concerned, coal industry is pre-dominantly managed through a number of coal companies directly under thecontrol of Government of India. Though the practice of allotting coal blocks forcaptive purposes to the private sector has been there for quite some time, it isonly in the recent past, in the last 2 years particularly, a number of coal blocks

have been allotted and are being allotted to both public sector power companiesand private sector power plants. The results of these decisions would beforthcoming in next 2-3 years when one could expect that a reasonable amountof coal production would be taking place through organizations other than thestate controlled coal companies.

10. Some of the issues that are under consideration include the following:

(i) In order to extract maximum amount of extractable coal, a substantialportion of which could be within 150 meters of depth, but a goodportion could also lie below 150 meters, through insitu coal gasification.

(ii) Employing latest technologies so that coal is extracted to the extentpossible through both open cast mining and underground miningprocesses.

(iii) Putting in place alternate institutional mechanism so that the processof coal exploration, which is at present being done only by the CentralMine Planning and Design Institute (CMPDI), a subsidiary of Coal IndiaLimited, is undertaken by a number of other agencies and more andmore coal reserves are brought into the category of exploitablereserves with clear and dependable estimate of reserves that can beexploited;

(iv) Matching with the massive capacity programme in the power sector,the present level of coal production, which is about 370 million tones,will need to be stepped up, and by the year 2030, the projection is ofthe order of 1500 million tones of coal production.

11. Opening up of the coal sector for private investment has been an issue forconsideration for some time. The Coal Mines Denationalization Bill, 2000 hasbeen pending consideration by the Indian Parliament. While that is taking time,the Government has decided that, as an interim step, a number of players couldbe brought into coal production process by setting aside a reasonable amount ofreserves to be developed for captive purposes by power producers and otherusers such as steel, cement etc. As mentioned earlier, since 80% of coalproduction is consumed by the power sector, if this line of approach is followed toa larger extent, the number of players in the system would increase withconsequential increase in the total production of coal also by players other thanthe Government controlled coal companies. This has the potential of establishingbetter benchmarks of deployment of new technology, proper utilization oftechnology, productivity, optimum cost and, therefore, possibility of producingcoal at lower rates with consequential advantage to the power producers whocan then pass on the benefit of reduced cost of power to consumers.

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12. As per the present policy, the pricing of coal, which, for a number of yearsused to be administered by the Government, has been now left to the coalproducers. Though so far power and coal producers have been able to amicablyresolve the pricing issue, this has been an area of concern for those who are

large consumers of coal particularly in the power sector. Therefore, a need hasbeen voiced by major coal consumers that so long as sufficient amount ofcompetition is not introduced in the coal sector with larger number of players andsignificant proportion of coal production by players other than the Governmentcontrolled coal companies, it might be desirable that a regulatory oversight isfacilitated so that coal producers do not fix the coal price in the manner they wishat the cost of interest of coal consumers.

13. Ultimately, coal sector would be developed in a manner that it is themarket which would determine the price. But the road map to achieve thatdestination would be relevant to be blue printed. Till the time substantial amount

of competition is generated and a market is created in which both the suppliersand the consumers have options to choose, the need for coal regulator is beingexperienced. Now, a number of power plant operators are going to have theirown captive coal mines. And obviously, if the cost of coal is going to be a passthrough for the power cost, a regulatory intervention to see that the price at whichit is transferred to the power plants so that interest of consumers is protected,appears to be necessary. At this stage, the coal market does not exist. A largenumber of pit head power plants which constitute a substantial portion of theinstalled capacity, depend on the coal produced and supplied locally for all suchpower plants, it is single buyer model and single seller model, there is one coalcompany which has to supply coal to the power plants and there are a group of

power plants in the area which are the buyers of coal.

14. There exists a scope for major research and development programmes.Some of them have been initiated for more environment friendly use of coal. TheEnvironment Ministry of Government of India has made it obligatory that suchpower plants, as are located at far off places and need to transport coal throughlong distances, must resort to using beneficiated coal whereby the ash content ofthe raw coal could be reduced from 40 -45% to close to 30%. Future powerplants will, therefore, have to depend substantially on use of beneficiated orwashed coal. Other methods of clean coal technologies such as IGCC, Coal BedMethane are also having potential, but this would require sustained and

concerted efforts so that Indian coal, which is disadvantaged from high ashcontent, but is advantaged in so far as the sulphur content is concerned, is put touse in a manner that the adverse impact on environment is minimized to theextent possible.

15. India has also joined the global initiative on Carbon SequestrationLeadership Forum (CSLF). As a matter of fact, India was one of the first 15

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nations in the world, which signed the CSLF Charter in June 2003 and it isrepresented on the CSLF Policy and Technical Groups. Out of the 17 projects,which have been undertaken under the aegis of CSLF for carbon capture andstorage, one of the projects has been undertaken by India in collaboration withUSA. On a long-term basis. Carbon capture and storage has a future and there

would come a time when various technologies that are evolved would come inthe cost effective regime so that countries like India, which need to deploy suchtechnologies when they become cost effective in order that they do not have anyadverse impact on cost of production of power, is in a position to deploy thesetechnologies extensively. India is also the first country in the world, which has

joined the USA for the Futuregen Project, which aims at setting up a power plant,which will have zero emission. Some of the Indian companies are also in theprocess of joining as alliance partners in this project.

OIL SECTOR

16. Oil constitutes over 35% of the primary energy consumption in India. It isexpected that this would rise both in terms of absolute amount and proportion.The demand projection is placed at about 200 million metric tones by the end ofthe 11th Five Year plan i.e. by 2011-12 and over 250 million metric tones by2024-25. The present level of demand is about 120 million metric tone of oilequivalent. At present. the upstream regulation is by the Director General ofHydro Carbons. They concentrate on the technical aspects and pricing is notunder their domain. However, under the NELP contract, the private sector wouldneed to have the price approved by the Government and to that extent, DirectorGeneral, Hydrocarbons would have a role.

17. Over the last 6-7 years, the sector has been opened up. The PetroleumRegulatory Bill envisages the institution of regulator, which will oversee the downstream aspects of the sector. A major trend in the oil and gas regulation in Indiais the opening up of this sector to private and foreign investments. 100% FDI isallowed in exploration, pipeline infrastructure, refining and in down streamretailing. With a view to enlarging investment in the upstream side, the Ministryof Petroleum & Natural Gas has introduced a transparent system of internationalcompetitive bidding for allotting of oil and gas blocks. The NELP was launchedfor the first time in 1997 and as many as 120 production-sharing contracts underfive such rounds were finalized. Over 700 million metric tones of oil and oil

equivalent gas are established through the five rounds. The recent round ofNELP tender has also attracted a number of players. However, most of them arefrom public sector. It is important to bring in technologies and internationalbenchmarks of practices and parameters and, therefore, the Government is keenon larger foreign participation under the NELP.

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GAS SECTOR

18. Natural gas constitutes about 9% in the Indias energy profile, ascompared to about 25% world average. About 45% of natural gas is consumed

by power sector and about 40% by the fertilizer sector. The balance 15% goesfor various other consumption. At present about 65 million cubic meters of gasper day is being consumed and it has the potential for increase.

19. Both the Power Sector and Fertilizer Sector have been planning for largerconsumption of gas and increased capacities so as to produce more powerthrough this environment friendly fuel. However, the recent trends in gas pricesglobally has created a dampening impact on the power plant planners both fromthe point of view of lack of predictability about availability of this fuel and more soon account of lack of predictability of its price behavior. In the power sector,about 12,500 MW of capacity out of the 1,25,000 MW of total capacity is gas

based combined cycle power plants. Because of lack of availability of gas,almost 35% of the capacity remains unutilized and these plants then need toresort to naptha as a substitute fuel which is excessively costly. Some of thepower plants, which were planned and are in the process of being commissionedface the problem of non-availability of gas. There are couples of LNG terminalsin the country each with a capacity of 5 million tones. Their capacities ofprocessing LNG are not fully used in view of the recent excessive rise in the priceof LNG, which has made it unaffordable for the power producers to access LNGand use it in their power plants.

20. Some of the issues in the area of gas are as follows:

(i) Power and Fertilizers sectors have been provided gas under theAdministered Price Mechanism in last over 20 years. Gasproducers and supplier desire market determined prices, whichcould be much higher. Consumers have been saying that whenshortages are so acute and producers and suppliers are few,there is practically no competition and, therefore, no market. Insuch a situation, till market develops to a reasonable level,regulatory intervention could be essential. Obviously, there arediffering schools of thought on this issue.

(ii) Huge resources of gas which have been discovered by RelianceIndustry, ONGC, Gujarat Gas, Cairn Energy and others, when

produced and supplied, there will be greater clarity on adequacyof supply and predictability of price. Till then power developershave adopted a dual approach

i. for existing capacities of power plants where assets face asituation of idleness, a higher price for gas/LNG is acceptedto utilize the existing capacities.

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ii. For new plants, they have decided to wait and watch to bebetter aware of the ground reality, may be in next 2 years orso.

(iii) Gas discoveries in KG Basin and in some of the Western Coast

areas have created a positive impact. It is expected that thesediscoveries when exploited - and it is targeted that some time inthe year 2008, a substantial amount of production would flowfrom the KG basin, power plant developers and those in theFertilizer Sector and other areas could expect to get largeramount of natural gas. If there is predictability about its price, itwould be possible to enhance the present projection of gasbased power capacity to a higher level.

(iv) Domestic reserves will obviously not be sufficient. Gas supplywill need to be supplemented through LNG import withappropriate enhancement of LNG Re-gasification facilities.

NUCLEAR POWER

21. India has established its capability in design, engineering, constructionand operation of nuclear power plants. The installed capacity is 3310 MW, lessthan 3% of total installed capacity of power, consisting of two Boiling WaterReactors and twelve Pressurized Heavy Water Reactors, eight more reactors(total capacity 3420 MW) are under construction.

22. India believes that nuclear power could be a good source of its power

profile and therefore its proportion should increase from 2.6% to say 7 to 8% by2030 which will mean a capacity of over 55,000 MW. Department of AtomicEnergy, therefore, has evolved an approach and perspective which includessetting up of Pressurized Heavy Water Reactors in the first stage, Fast BreederReactors in the second stage and Reactors based on Uranium 233 Thorium232 cycle in the third stage. Construction on two units of 1000 MW atKudankulam in Tamilnadu, as per the agreement between India and RussianFederation marks the beginning of introduction of Light Water Reactors (LWR).

23. At present, entire development of nuclear power plants is through NuclearPower Corporation of India, a company under the control of Government of India.

As per the Atomic Energy Act, private sector is not permitted to develop theseplants. Tariff determination for power generated in these plants is also not underthe jurisdiction of the Regulatory Commission; the Government of India decides it.

24. Management and disposal of waste has been carried out fairlysatisfactorily. These plants have demonstrated good track record of safety and

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waste management. To deal with the issue of safety and related matter, there isan independent Regulatory institution.

Non Conventional Energy Sources

25. Indian Government has accorded very high priority to develop and expandinstalled capacity base through non-conventional sources of electricity generation.There is a separate Ministry in the Government of India to exclusively focus onthis important area of power generation. National Electricity Policy notified in2005 in pursuance of the Electricity Act, 2003, prescribes that State ElectricityRegulatory Commissions should prescribe a proportion of power which should beproduced and supplied to the grid through the non-conventional sources. Someof the Regulatory Commissions have come out with specific policy guidelineswith a different approach on tariff for these plants in order to encourage thesetechnologies and plants. National Electricity Tariff Policy mandates that StateCommissions should fix such minimum percentage latest by April, 2006. India

has very high potential for these capacities:

Potential (MW) Existing capacity(MW)

Wind 45,000 4,400

Small Hydro (upto 25MW)

15,000 1,700

Solar (PV) 20 MW/Sq.Km Very little

Biogas plants 12 million 3.8 million

Urban/Industrial waste

based plant

2,700 Very little

It may be seen from the above that India has achieved substantial success onwind turbine based power generation. Ministry of Non-conventional EnergySources (MNES) has set a target of achieving at least 10,000 MW capacitythrough various non-conventional sources, by the year 2012.

26. Electricity Act 2003 has a special provision to promote stand-alonedecentralized distributed generation and supply in rural area. To encouragethese technologies and to mitigate the challenge of rural electrification, for these

areas, not only generation is delicensed but generation as well as distribution isfully delicensed. This enabling framework aimed at removing entry barrier has atremendous potential for technologies like biomass, biogas, micro-hydel etc.

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Conventional Sources of Electricity Generation

27. Fossil fuel based thermal power, hydro-electric, and nuclear constitute theconventional sources of power. Non-conventional sources are less than 5% of

total installed capacity in India. The present installed capacity (as in March 2006)is about 1,25,000 MW, consisting of coal based plants (56%), gas based plants(10%), hydro-electric (26%), nuclear (3%) non-conventional (5%).

28. Indian Power Sector was opened up for private power generation in 1991.In terms of ownership structure, the profile consists of Central Governmentowned companies (32%), State Government owned companies/ElectricityBoards (57%) and Private Sector (11%). 100% FDI is permitted in all segmentsof electricity industry viz. Generation, Transmission, Distribution, Trading.

29. In the last three years far-reaching structural changes have been

introduced in the Indian Electricity Sector. Electricity Act 2003 is an historiclegislative initiative with powerful potential to transform the power sector industryand market structure. The Preamble of the Act says:

An Act to consolidate the laws relating to generation, transmission, distribution,trading and use of electricity and generally for taking measures conducive todevelopment of electricity industry, promoting competition therein, protectinginterest of consumers and supply of electricity to all areas, rationalization ofelectricity tariff, ensuring transparent policies regarding subsidies, promotion ofefficient and environmentally benign policies, constitution of Central Electricity

Authority, Regulatory Commissions and establishment of Appellate Tribunal and

for matters connected therewith or incidental thereto

30. Most important features of the Electricity Act 2003 are as follows:

The Act creates a liberal and transparent framework for powerdevelopment

It facilitates investment by creating competitive environment and reformingdistribution segment of power industry.

Entry Barriers have been removed/reduced in following areas:

Delicensed generation.

Freedom to captive generation including group captive

Recognizing trading as an independent activity

Open access in transmission facilitating multi buyer and sellermodel.

Open access to consumers above 1 MW within five years commencingfrom 27

thJanuary, 2004 (date of enforcement of amendment to Electricity

Act) Regulators have been mandated to ensure this.

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Multiple licenses in distribution in the same area of supply so thatcompetition could yield better services to consumers.

Regulatory Commissions to develop market and to fix tariff.

31. Implementation of the Act

Most of the Rules (required to be framed by Central Govt) have beennotified

National Electricity Policy has been announced Central Electricity Regulatory Commission and State Electricity Regulatory

Commissions are in place and are fully functional. Electricity Appellate Tribunal: Operational Guidelines for determining tariff through competitive bidding notified Regional Power Committees for all the 5 regions established Tariff policy notified CERC has notified open access in transmission and several other rules

and guidelines

Several SERCs have initiated action on open access in Distribution

32. National Electricity Policy (2005) aims at

Total village electrification by 2010

By year 2012: Per capita availability 1000 units Installed capacity over 200,000 MW Spinning reserves 5% Minimum lifeline consumption of one unit per household per day

Inter-regional transmission capacity 37,000 MW Energy efficiency/conservation savings about 15% Quality and reliable power supply.

33. Electricity Tariff Policy was notified by Government of India in January,2006. The main features are:

Tariff of all Generation and Transmission projects in Private Sectorthrough Competitive route Public Sector to complete transition in fiveyears.

Reduction of cross subsidy to (+)(-) 20% in next five years.

Emphasis on facilitating Open Access in Distribution; clear formulation oncross subsidy surcharge.

Transmission Tariff framework sensitive to distance and direction. Strict implementation of Performance Standards. Agriculture Tariff to leverage sustainable use of Ground Water Resources Time bound introduction of MYT.

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34. Demand Projection

Peak demand estimation:

End of XI Plan (2007) 157 GW

End of XII Plan (2012) 213 GW

For next 30 years, capacity will need to be doubled every 10 years. Full development of Hydro potential has been taken up as a national

priority.

There is growing recognition of the position that India has takenthat all hydro is renewable irrespective of size. World EnergyCongress has also now recognized this.

50,000 MW Hydro Initiative was launched in August, 2003.

73 projects with capacity of 33,000 MW have been taken up forDPR preparation.

Thermal power generation capacity is required to be enhanced to meetthe growing demand.

100,000 MW Thermal Initiative was launched in 2004. Under the Initiative, shelf of Feasibility Reports (FRs) for setting up

thermal power projects is to be prepared at feasible sites with allclearances in place.

Projects totaling 60,000 MW have been identified.

The latest initiative of the Govt of India to set up a chain of largesize ultra mega projects of 4000 MW each at mine mouth andcoastal locations aim at using latest supercritical fuel efficienttechnologies.

35. National Grid

The energy potential in the country is concentrated in certain pockets.Coal reserves are located in a few states and similarly huge hydro-electricpotential is located in a few states. This poses a challenge to embark uponmassive inter-regional transmission capacity.

Augmentation of National Grid

Intra-regional expansion of transmission capacity is linked to generationprojects.

Inter-regional connectivity has been planned with hybrid systems,

consisting of HVDC, Ultra High Voltage AC (765 KV) & Extra High VoltageAC (400 KV) lines.

Present Inter-regional transfer capacity is 9,500 MW, being enhanced to17,000 MW by 2007.

37,000 MW by 2012.

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36. Projected Capacity Addition for 2007-12 (XI Plan)

Fuel-mix Central Sector State Sector Private Sector Total

Thermal 21,000 11,000 12,000 44,000

Hydro 10,000 5,000 - 15,000

Nuclear 3,000 - - 3,000Total 34,000 16,000 12,000 62,000

May be revised to 67,000 MW, depending on the availability of Gas/LNGin required quantities and right prices.

In addition, 5000 MW through Non-conventional Energy Sources. Captive capacity not included.

37. Clean Development Mechanism

India is emerging as one of the largest potential source of Carbon

Emission Reduction (CER) Designated National Authority is fully functional Focus areas in Energy Sector:

R&M of old plants

Conversion of LT to HT lines

Supercritical Thermal Power Projects

Hydro projects

38. Distribution Sector Reform

The Government of Indias Accelerated Power Development and Reform

Programme (APDRP) being implemented through the X Plan (2002-07) aims atcomprehensive reform of electricity distribution in urban/industrial centres.Revamping, augmenting and modernizing the distribution network and system forimproved reliability of power supply, reducing technical and commercial losses,and improving financial health of distribution utilities are the main objectives ofthe scheme.

39. Rural Electrification

56% of Rural households (about 78 million) do not have access to electricity.Government of India has launched a massive programme called Rajiv Gandhi

Grameen Vidyutikaran Yojana to provide electricity access for all by 2012 andelectrify all villages by 2009.

The scheme aims at creating Rural electricity infrastructure to cater to therequirements of:

Household needs

Agriculture and irrigation pumpsets

Cold Chain

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Small and medium industries

Social services Health, Education Decentralized distributed generation for such villages where grid

connectivity is either not feasible or not cost effective. Decentralized management by Franchisees, Co-operatives, etc.

40. Energy & Environment

India believes that while energy development, at a rapid pace, is essential forproviding to its people a reasonable standard of living, it is equally important thatall issues concerning environment protection and enrichment are addressedadequately and sincerely. There is a full-fledged Ministry of Environment andForests, which has set out policies, rules and procedures and projectdevelopments, happen only after proper scrutiny and clearance by this Ministry.India has also associated in most of the global initiatives aimed at mitigatingclimate change related challenges. India is a founder member in the Carbon

Sequestration Leadership Forum (CSLF), Methane to Market Partnership, andInternational Partnership for Hydrogen Economy, and Asia-Pacific Partnership forClean Development and Climate, Indo-EU Cooperation etc. India has also signeda Framework Protocol with the USA for cooperation on the development of Zeroemission Futuregen Project.

41. Conclusion

India targets 9 10% economic growth rate in a sustainable manner overnext 10-15 years. Adequate availability of energy would be sinequanon forthis objective to materialize. There are shortages in all the energy segments.

Substantial expansion of capacities in coal, petroleum, gas and electricity is,therefore, the thrust of the Government policies and programmes. Ultimate goalis to develop these markets and facilitate, through various policy initiatives, theirmatured functioning in a competitive manner. Skillful development of road mapsto reach the goal is a challenge. During the period of transition, therefore,regulatory interventions to harmonize the interests of investors, developers andconsumers, is an approach, which is being pursued by various energy groups. Inmost cases, development of energy sector, in various segments, has happenedunder government-controlled organizations. Over last 10-15 years, privateinvestments are being encouraged, particularly in petroleum, natural gas andpower. While India is fully committed to develop and expand its energy markets,

it is equally committed to ensure environmental safeguards. Using latest costeffective technologies in all the energy segments forms an important part ofpolicy and strategy.

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Energy Markets & Technologies-revised1