Amid extremely volatile global oil markets and increase in prices of natural gas and imported coal, which have put enormous pressure on domestic prices, Prime Minister Manmohan Singh on Wednesday said there was need to examine the relevance of the entire gamut of taxes and subsidies in the energy sector.
"The extreme volatility that we have seen in international oil markets, coupled with similar magnitudes of price increases in natural gas and imported coal, has put enormous pressure on domestic prices," Singh said addressing the energy conclave on 'Implementing the Integrated Energy Policy' organised by IRADe.
"We need to factor in the economic cost and the environmental cost of alternative sources of energy while setting their prices. Only then we will be able to ensure that the energy security we desire gets translated into reality," he added.
Pricing policies play an important role in consumers' selection of energy sources, he said adding, "We must examine the relevance of the entire gamut of taxes and subsidies on various energy forms and energy using devices."
Singh also expressed concern over the mounting losses in the power sector and called for a new management strategy to deal with the situation in the energy sector.
"There are transmission and distribution losses as high as 40-50 per cent in several parts of the country and the new management system will have to deal with this harsh reality," Singh said.
Looking at the requirement of energy in India in next 25 years, Singh said the power sector alone would need Rs 60 lakh crore and such scale of investment would come only when there are proper returns.
The Integrated Energy Policy has estimated energy requirements in the year 2030, to be higher than existing level by a factor of anywhere between 4 and 5, if the Indian economy grows at around 8 per cent annually, the Prime Minister said.
"The figures for future requirements are gigantic. Electricity generation capacity would need to go up from our current installed capacity of a 131,000 MW to 800-950,000 MW.
This would imply huge annual imports of oil anywhere between 300 to 400 million tonnes and coal imports that could touch 800 million tonnes annually," Singh said.
Can we afford to follow this energy path? Singh asked while raising a host of questions.
"How can we ensure that such vast quantities of energy are available to us? What would be the investment and foreign exchange requirements? India urgently needs to define a new paradigm of development for its energy sector," he said.
And this paradigm would have to focus on both the demand side and supply side. This calls for judicious use of available domestic resources and focus on efficiency at all levels, Singh said.
India is short of modern energy resources like oil, gas and uranium and even coal is not as abundant as is generally believed. "Thus we must use our energy resources optimally and efficiently," Singh said.
The exploration, production of fuels, electricity generation, T&D of power and setting up a gas grid, require large investment and this would be possible only if the sectoral policies were consistent and there were reasonable returns on the investments.
"Both the public and private sectors have to play important roles here, Singh said adding, "We need to develop public private partnerships in ways that attract the needed investment and provides energy services to the consumers at least cost," Singh said.
Singh also called for developing all resources - coal, gas, oil, hydro and nuclear along with renewables, such as wind and solar.
On the nuclear energy development, Singh said, "The speed with which we can develop nuclear power is constrained by the availability of uranium. The civil nuclear agreement we have entered into with the United States, and our discussions with the Nuclear Suppliers' Group, should help in accelerating the development of nuclear energy."