It has been more than a year since the government published the Integrated Energy Policy Report (IEPR). Like many other government studies, this report, published in August, 2006 has also been ignored and buried. This is most unfortunate.

According to IEPR, India will need a total primary energy of 1536 to 1887 million tons of oil equivalent (mtoe) to achieve 8 per cent GDP growth in 2031 from the current level of 520 mtoe. This is based on a heroic assumption of achieving high level of energy efficiency.

IEPR has attempted to ensure clean and convenient “lifeline energy” for the poor. For this it was assumed that non commercial energy dependency will reduce from the current level of 35 per cent to 10 per cent by 2031. However this can happen only if the recommendations of the report are implemented.

The market mantra

The underlying mantra in IEPR was to adapt free market approach based on competition. When we analyse the development in India’s energy scenario since the unveiling of IEPR, we cannot see any step to implement IEPR recommendations with any degree of urgency. In many aspects, it has been business as usual despite high crude oil prices. 

Currently coal meets 50 per cent of commercial energy needs. Coal is forecast to have even a larger role in the future. IEPR had suggested for the liberalisation and greater involvement of private investment of coal sector. But, Coal India, which produces 90 per cent of India’s coal production, continues to remain one of the most inefficiently managed Public Sector Undertakings. 

It is the oil and gas sector which is the most vulnerable sources of energy. During the last year, we have even taken retrogressive steps by increasing government interference in oil and gas sector since the dismantling of the administrative price mechanism. The government has found it convenient to control petrol and diesel prices for political reasons.

Another significant recommendation of IEPR was to give subsidies for deserving families through debit card system to avoid the well known diversion of kerosene to blend with petrol. The government has not taken steps to implement such a foolproof system to stop the leakages. In the gas sector, the government has singularly failed to carry out any reforms. According to IEPR, all commercial primary energy sources must be priced at trade parity prices at the point of sale. With the gas sold by public sector oil companies way below the market prices, IEPR’s recommendation is completely ignored.

Some reforms were indeed implemented in power sector. But most of them took place much before IEPR. Last year, no new step was taken to streamline the operations of the State Electricity Boards as recommended in IERP.

Grave crisis

To promote energy efficiency, IEPR had recommended the promotion of urban mass transport, energy efficient vehicles and freight movement by railways through scheduled freight trains with guaranteed, safe and timely deliveries and also enforcement of minimum fuel efficiency standards for all vehicles.

According to IEPR, India’s energy security, at its broadest level, is primarily about ensuring the continuous availability of commercial energy at competitive prices to support economic growth and meet the lifeline energy needs of its households with safe, clean and convenient forms of energy. The most critical elements of our energy security are the measures suggested to increase efficiency, reduce requirements and augment the domestic energy resource base. Unfortunately, India is slow or often negligent in implementing these measures. 

Despite the huge subsidies spent on kerosene, the poor still have no access to that cooking fuel. It is still not recognised that most of the benefit of “free electricity” in agriculture sector is going to a small percentage of rich and middle class farmers. Actual loss to the government on account of diverted subsidised products, “free power” and undeserved subsidies on LPG easily amount to more than Rs 90000 to 100000 crore. It is this huge amount which is preventing the government from implementing the recommendations made in IEPR.