Presentation for IEC : 2015

28th January 2015

New Integrated Energy Policy

Why a new Policy?

Move away from getting into
sectoral issues
First Fix Inter Sectoral Issues and
Principles
Principles first, numbers later

Objectives
Evolve

Principles which will apply

to all Energy Sectors
Deviations to be the exception;
where unavoidable they will have
to be specifically proposed,
justified and approved

Principles
Resource Assessment
Role

of Private Sector
Single Regulator
Pricing supply side and demand
side
Taxation

RESOURCE ASSESSMENT
Recoverable Reserve estimation not available in
public domain
Quantum of Recoverable Coal Reserves
doubtful
Need periodic correction for economic and
environmental reasons
Current reserve estimation not useful for
planning or deciding linkages

ROLE OF PRIVATE SECTOR

The roles vary considerably across energy
sectors
Mode of selection also varies ideally all
sectors should use competitive bidding
Terms of operation should also be similar
merchant sale is allowed in oil and gas sector
but in coal it is restricted to captive use
Revenue share vs cost recovery is another
common issue

SINGLE REGULATOR
Ideally there should be one regulator for all
energy sectors many countries use this model
Till this happens the role of the regulator
should be uniform across sectors
Power sector regulation is most advanced with
coal the most behind
Not rational to trust regulator in one sector
but not in another

PRICING SUPPLY SIDE AND

DEMAND SIDE

Of all the issues this is the most difficult and also important.
Pricing Policy has to take note of the fact that our import
dependence is rising and with it our exposure to external price
developments
Supply side consumer price should be linked to import parity
prices while production prices should be close to cost of
production
Imperative that all suppliers of energy goods and services get fully
compensated by prices/subsidies

TAXATION

Uniform treatment for all in Direct Taxation

Accelerated Depreciation is not a good incentive
however if given in one area it should be given to all
Indirect Taxation should be used to tax inefficient and
large vehicles/farm equipment
Likewise Tax on efficient appliances should be minimised
if not made zero.

SUBSIDIES

Subsidies should be open and not hidden in terms of tax

concessions
Subsidies should be linked to performance and not
capital investment
On consumer side subsidies should be given as direct
cash transfer and not bundled with goods this never
has the intended benefit