India’s power and upstream energy sectors need investments to the tune of $120–150 billion in the next five years, according to a report by the Confederation of Indian Industry (CII) and consultancy firm KPMG titled India Energy Inc. – Emerging Opportunities & Challenges, released on Wednesday.
The study emphasises the need for strong private sector participation to complement public sector and to bring in the required capabilities and technologies.
According to the report, Indian energy sector is attracting investment in diverse streams, which is driven by a surging economy and the resulting demand-supply gap in the short run and by the need to achieve sustainability and self-sufficiency in the long run.
Government policies have increasingly recognised the need to promote private investment. Private interest in captive coal mining, oil and gas exploration and in power sector has shown significant progress, which is expected to be replicated in nuclear sector.
Tariff reform
The report notes that tariff reform in the energy sector and distribution reform in the power sector are two important steps that need to be successfully carried out.
The study has further pointed out that tariff reform to phase out subsidies or to target them effectively and distribution reforms to bring efficiency in the power sector are vital. In addition, energy transport infrastructure such as ports, railways, pipelines and power transmission networks need significant investment.
To meet its large and growing energy needs, there are certain key imperative for the Indian energy sector, which include reducing vulnerability to price and supply shocks, according to the report.
Biggest challenge
The biggest challenge, according to the joint study, is to replace coal (exhaustible in 40 years), representing 51per cent of the energy basket, and oil which is heavily dependent on international supply in the short term towards natural gas, hydro and renewable sources.
Apart from diversifying the basket, enhancing domestic production and taking equity positions in energy resources abroad are also necessary steps in reducing the effects of fuel price shocks, are among the imperatives CII-KPMG report has observed.
