ENERGY MARKETS AND TECHNOLOGIES IN INDIA

R.V. SHAHI
Secretary, Government of India
Ministry of Power

80% of global population lives in developing areas. Of the 6.0 billion

populations, 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 rising
at the rate of 0.9% per year and in the year 2030, the OECD countries would
consist of North America (0.5), Europe (0.6) and Asia Pacific (0.2), the total being
1.3 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 in
the non-OECD countries would be higher than the population growth in the
OECD countries. And, as a result, by the year 2030, the global population in the
OECD 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 the

OECD countries, would consume, by the year 2030, more than 40% of energy
and the balance about 84% of the global population in the non-OECD areas
would 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 energy
consumption in the non-OECD countries would be higher than in OECD
countries and would vary between 1.3% in the Russian-Caspian area to 3.2% in
the Asia Pacific areas, as opposed to the rate of growth of energy consumption
during 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 year
2030, 16% of global population would consume as much as 40% of the energy
and the balance 84% of the global population would consume less than 60% of
energy. Providing access to adequate energy to their people is really a challenge
for 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 energy
consumption, by world standards, is very low. The estimate of annual energy
consumption in India is about 330 Million Tones Oil Equivalent (MTOE) for the
year 2004. Accordingly, the per capita consumption of energy is about 305
Kilogram Oil Equivalent (KGOE). As compared to this, the energy consumption
in some of the other countries is of the order of over 4050 for Japan, over 4275
for South Korea, about 1200 for China, about 7850 for USA, about 4670 for
OECD countries and the world average is about 1690.

4. In so far as electricity consumption is concerned, India has reached a level

of about 600-kilowatt hour (kwh) per head per year. The comparable figures for
Japan are about 7,800, for South Korea about 7,000, for China about 1380, for
USA about 13,000, for OECD countries about 8050 and world average are about
2430. Thus, both in terms of per capita energy consumption and in terms of per
capita electricity consumption, India is far behind many countries, and as a
matter of fact, behind even the world average. Therefore, to improve the
standards of living of Indian people and to let them enjoy the benefit of economic
development, it is imperative that both energy consumption and electricity
consumption 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 growth
rate for next 10-15 years, it would be essential that the level of energy availability
and consumption, and electricity consumption in particular, is enhanced
substantially.

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 issue
concerning energy consumption, and more particularly, the need for enhancing
the energy supply, India has accorded appropriate priority to both - supply side
management and demand side management. On the supply side management,
while it is essential for India to radically expand the capacities on all the fronts
and all the segments of energy, equally important is the need for efficient
consumption 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 so

large 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 all
possible options to create reasonably large capacity base on the energy side. It
needs to expand manifold the coal production, extract through all possible means,
the oil and gas reserves, wherever possible, resort to import of coal, acquire coal
and gas reserves abroad, will need to continue substantial dependence on import
of oil, and exploit fully the large hydro electric potential which is of the order of
over 1,50,000 MW. Only about 32,000 MW i.e. about 20% of the hydroelectric
potential 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 of
the order of 200 billion tones is inevitable. Nuclear programme has proved to be
effective and successful. After initial teething problems in mid eighties, from
early nineties, the nuclear power plants have demonstrated to be utilized at
substantially high level of availability and efficiency and this is one of the
important options that India is pursuing. Gratifyingly, a number of companies in
India have discovered huge gas reserves, both on the Western, and more
particularly, toward the Eastern coast. Besides, a number of LNG terminals have
also been developed and are being developed so that the use of gas could be
supplemented through import of Liquefied Natural Gas. India is one of the very
few countries which has been successful in employing wind turbine technology
and today of the total capacity of 1,25,000 MW in the country about 5% is
constituted by the various non-conventional sources of generation, wind being
the 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 energy
consumption, it has been established that over 20% of energy is wasted because
of in-efficient consumption. The Government of India enacted a legislation called
Energy Conservation Act in the year 2001. The Bureau of Energy Efficiency
(BEE) has been put in place in pursuance to implementation of this law. The
Bureau has formulated a number of major action plans to make significant dent
on various segments of energy consumption in the domestic sector, in the
agriculture, in service group and in manufacturing sector. The programmes
include Standards and Labeling of energy consuming gadgets, setting and
enforcing consumption norms, developing energy efficient building codes, energy
audits of large buildings etc.

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

Coal Sector

8. As mentioned earlier, coal constitutes the most dominant constituent of

the energy sector. In the year 2005-06, the coal production was over 370 million
tones. 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 ash
content coal in the calorific value range of 3000 kilo calorie per kilogram to 4,500
kilo calorie per kilogram and ash content in the range of 30 45%. Using the
high ash coal for the power sector is a major challenge, from the point of view of
achieving high level of efficiency of consumption, and more particularly, from the
point 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 the
control of Government of India. Though the practice of allotting coal blocks for
captive purposes to the private sector has been there for quite some time, it is
only 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 companies
and private sector power plants. The results of these decisions would be
forthcoming in next 2-3 years when one could expect that a reasonable amount
of coal production would be taking place through organizations other than the
state 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 substantial
portion of which could be within 150 meters of depth, but a good
portion could also lie below 150 meters, through insitu coal gasification.
(ii) Employing latest technologies so that coal is extracted to the extent
possible through both open cast mining and underground mining
processes.
(iii) Putting in place alternate institutional mechanism so that the process
of coal exploration, which is at present being done only by the Central
Mine Planning and Design Institute (CMPDI), a subsidiary of Coal India
Limited, is undertaken by a number of other agencies and more and
more coal reserves are brought into the category of exploitable
reserves with clear and dependable estimate of reserves that can be
exploited;
(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 of
the order of 1500 million tones of coal production.

11. Opening up of the coal sector for private investment has been an issue for
consideration for some time. The Coal Mines Denationalization Bill, 2000 has
been pending consideration by the Indian Parliament. While that is taking time,
the Government has decided that, as an interim step, a number of players could
be brought into coal production process by setting aside a reasonable amount of
reserves to be developed for captive purposes by power producers and other
users such as steel, cement etc. As mentioned earlier, since 80% of coal
production is consumed by the power sector, if this line of approach is followed to
a larger extent, the number of players in the system would increase with
consequential increase in the total production of coal also by players other than
the Government controlled coal companies. This has the potential of establishing
better benchmarks of deployment of new technology, proper utilization of
technology, productivity, optimum cost and, therefore, possibility of producing
coal at lower rates with consequential advantage to the power producers who
can 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 years
used to be administered by the Government, has been now left to the coal
producers. Though so far power and coal producers have been able to amicably
resolve 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 has
been voiced by major coal consumers that so long as sufficient amount of
competition is not introduced in the coal sector with larger number of players and
significant proportion of coal production by players other than the Government
controlled coal companies, it might be desirable that a regulatory oversight is
facilitated so that coal producers do not fix the coal price in the manner they wish
at the cost of interest of coal consumers.

13. Ultimately, coal sector would be developed in a manner that it is the

market which would determine the price. But the road map to achieve that
destination 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 suppliers
and the consumers have options to choose, the need for coal regulator is being
experienced. Now, a number of power plant operators are going to have their
own captive coal mines. And obviously, if the cost of coal is going to be a pass
through for the power cost, a regulatory intervention to see that the price at which
it 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 large
number of pit head power plants which constitute a substantial portion of the
installed capacity, depend on the coal produced and supplied locally for all such
power plants, it is single buyer model and single seller model, there is one coal
company 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. The
Environment Ministry of Government of India has made it obligatory that such
power plants, as are located at far off places and need to transport coal through
long distances, must resort to using beneficiated coal whereby the ash content of
the raw coal could be reduced from 40 -45% to close to 30%. Future power
plants will, therefore, have to depend substantially on use of beneficiated or
washed coal. Other methods of clean coal technologies such as IGCC, Coal Bed
Methane are also having potential, but this would require sustained and
concerted efforts so that Indian coal, which is disadvantaged from high ash
content, but is advantaged in so far as the sulphur content is concerned, is put to
use in a manner that the adverse impact on environment is minimized to the
extent possible.

15. India has also joined the global initiative on Carbon Sequestration
Leadership 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 is
represented on the CSLF Policy and Technical Groups. Out of the 17 projects,
which have been undertaken under the aegis of CSLF for carbon capture and
storage, one of the projects has been undertaken by India in collaboration with
USA. 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 in
the cost effective regime so that countries like India, which need to deploy such
technologies when they become cost effective in order that they do not have any
adverse impact on cost of production of power, is in a position to deploy these
technologies 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 the
process of joining as alliance partners in this project.

OIL SECTOR

16. Oil constitutes over 35% of the primary energy consumption in India. It is
expected 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 of
the 11th Five Year plan i.e. by 2011-12 and over 250 million metric tones by
2024-25. The present level of demand is about 120 million metric tone of oil
equivalent. At present. the upstream regulation is by the Director General of
Hydro Carbons. They concentrate on the technical aspects and pricing is not
under their domain. However, under the NELP contract, the private sector would
need to have the price approved by the Government and to that extent, Director
General, Hydrocarbons would have a role.

17. Over the last 6-7 years, the sector has been opened up. The Petroleum
Regulatory Bill envisages the institution of regulator, which will oversee the down
stream aspects of the sector. A major trend in the oil and gas regulation in India
is the opening up of this sector to private and foreign investments. 100% FDI is
allowed in exploration, pipeline infrastructure, refining and in down stream
retailing. With a view to enlarging investment in the upstream side, the Ministry
of Petroleum & Natural Gas has introduced a transparent system of international
competitive bidding for allotting of oil and gas blocks. The NELP was launched
for the first time in 1997 and as many as 120 production-sharing contracts under
five such rounds were finalized. Over 700 million metric tones of oil and oil
equivalent gas are established through the five rounds. The recent round of
NELP tender has also attracted a number of players. However, most of them are
from public sector. It is important to bring in technologies and international
benchmarks of practices and parameters and, therefore, the Government is keen
on larger foreign participation under the NELP.

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GAS SECTOR

18. Natural gas constitutes about 9% in the Indias energy profile, as

compared 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% goes
for various other consumption. At present about 65 million cubic meters of gas
per day is being consumed and it has the potential for increase.

19. Both the Power Sector and Fertilizer Sector have been planning for larger
consumption of gas and increased capacities so as to produce more power
through this environment friendly fuel. However, the recent trends in gas prices
globally has created a dampening impact on the power plant planners both from
the point of view of lack of predictability about availability of this fuel and more so
on 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 to
resort to naptha as a substitute fuel which is excessively costly. Some of the
power plants, which were planned and are in the process of being commissioned
face the problem of non-availability of gas. There are couples of LNG terminals
in the country each with a capacity of 5 million tones. Their capacities of
processing LNG are not fully used in view of the recent excessive rise in the price
of LNG, which has made it unaffordable for the power producers to access LNG
and 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 the
Administered Price Mechanism in last over 20 years. Gas
producers and supplier desire market determined prices, which
could be much higher. Consumers have been saying that when
shortages are so acute and producers and suppliers are few,
there is practically no competition and, therefore, no market. In
such a situation, till market develops to a reasonable level,
regulatory intervention could be essential. Obviously, there are
differing schools of thought on this issue.
(ii) Huge resources of gas which have been discovered by Reliance
Industry, ONGC, Gujarat Gas, Cairn Energy and others, when
produced and supplied, there will be greater clarity on adequacy
of supply and predictability of price. Till then power developers
have adopted a dual approach
i. for existing capacities of power plants where assets face a
situation of idleness, a higher price for gas/LNG is accepted
to utilize the existing capacities.

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

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

areas have created a positive impact. It is expected that these
discoveries when exploited - and it is targeted that some time in
the year 2008, a substantial amount of production would flow
from the KG basin, power plant developers and those in the
Fertilizer Sector and other areas could expect to get larger
amount of natural gas. If there is predictability about its price, it
would be possible to enhance the present projection of gas
based power capacity to a higher level.
(iv) Domestic reserves will obviously not be sufficient. Gas supply
will need to be supplemented through LNG import with
appropriate enhancement of LNG Re-gasification facilities.

NUCLEAR POWER

21. India has established its capability in design, engineering, construction

and operation of nuclear power plants. The installed capacity is 3310 MW, less
than 3% of total installed capacity of power, consisting of two Boiling Water
Reactors 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% by
2030 which will mean a capacity of over 55,000 MW. Department of Atomic
Energy, therefore, has evolved an approach and perspective which includes
setting up of Pressurized Heavy Water Reactors in the first stage, Fast Breeder
Reactors in the second stage and Reactors based on Uranium 233 Thorium
232 cycle in the third stage. Construction on two units of 1000 MW at
Kudankulam in Tamilnadu, as per the agreement between India and Russian
Federation marks the beginning of introduction of Light Water Reactors (LWR).

23. At present, entire development of nuclear power plants is through Nuclear

Power 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 these
plants. Tariff determination for power generated in these plants is also not under
the jurisdiction of the Regulatory Commission; the Government of India decides it.

24. Management and disposal of waste has been carried out fairly
satisfactorily. 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 is
an independent Regulatory institution.

Non Conventional Energy Sources

25. Indian Government has accorded very high priority to develop and expand
installed capacity base through non-conventional sources of electricity generation.
There is a separate Ministry in the Government of India to exclusively focus on
this important area of power generation. National Electricity Policy notified in
2005 in pursuance of the Electricity Act, 2003, prescribes that State Electricity
Regulatory Commissions should prescribe a proportion of power which should be
produced and supplied to the grid through the non-conventional sources. Some
of the Regulatory Commissions have come out with specific policy guidelines
with a different approach on tariff for these plants in order to encourage these
technologies and plants. National Electricity Tariff Policy mandates that State
Commissions 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 25 15,000 1,700
MW)
Solar (PV) 20 MW/Sq.Km Very little
Biogas plants 12 million 3.8 million
Urban/Industrial waste 2,700 Very little
based plant

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

26. Electricity Act 2003 has a special provision to promote stand-alone

decentralized distributed generation and supply in rural area. To encourage
these technologies and to mitigate the challenge of rural electrification, for these
areas, not only generation is delicensed but generation as well as distribution is
fully delicensed. This enabling framework aimed at removing entry barrier has a
tremendous 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 the
conventional 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 Government
owned companies (32%), State Government owned companies/Electricity
Boards (57%) and Private Sector (11%). 100% FDI is permitted in all segments
of 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 historic
legislative initiative with powerful potential to transform the power sector industry
and 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 to
development of electricity industry, promoting competition therein, protecting
interest of consumers and supply of electricity to all areas, rationalization of
electricity tariff, ensuring transparent policies regarding subsidies, promotion of
efficient 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 power

development
It facilitates investment by creating competitive environment and reforming
distribution 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 seller
model.
Open access to consumers above 1 MW within five years commencing
from 27th January, 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 that
competition 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 been
notified
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 Sector

through Competitive route Public Sector to complete transition in five
years.
Reduction of cross subsidy to (+)(-) 20% in next five years.
Emphasis on facilitating Open Access in Distribution; clear formulation on
cross 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 taken
that all hydro is renewable irrespective of size. World Energy
Congress 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 for
DPR preparation.
Thermal power generation capacity is required to be enhanced to meet
the 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 all
clearances in place.
Projects totaling 60,000 MW have been identified.
The latest initiative of the Govt of India to set up a chain of large
size ultra mega projects of 4000 MW each at mine mouth and
coastal locations aim at using latest supercritical fuel efficient
technologies.

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-electric
potential is located in a few states. This poses a challenge to embark upon
massive inter-regional transmission capacity.

Augmentation of National Grid

Intra-regional expansion of transmission capacity is linked to generation

projects.
Inter-regional connectivity has been planned with hybrid systems,
consisting of HVDC, Ultra High Voltage AC (765 KV) & Extra High Voltage
AC (400 KV) lines.
Present Inter-regional transfer capacity is 9,500 MW, being enhanced to
17,000 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 - - 3,000
Total 34,000 16,000 12,000 62,000

May be revised to 67,000 MW, depending on the availability of Gas/LNG

in 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 at
comprehensive reform of electricity distribution in urban/industrial centres.
Revamping, augmenting and modernizing the distribution network and system for
improved reliability of power supply, reducing technical and commercial losses,
and improving financial health of distribution utilities are the main objectives of
the 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 and
electrify all villages by 2009.

The scheme aims at creating Rural electricity infrastructure to cater to the

requirements 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 for
providing to its people a reasonable standard of living, it is equally important that
all issues concerning environment protection and enrichment are addressed
adequately and sincerely. There is a full-fledged Ministry of Environment and
Forests, which has set out policies, rules and procedures and project
developments, happen only after proper scrutiny and clearance by this Ministry.
India has also associated in most of the global initiatives aimed at mitigating
climate change related challenges. India is a founder member in the Carbon
Sequestration Leadership Forum (CSLF), Methane to Market Partnership, and
International Partnership for Hydrogen Economy, and Asia-Pacific Partnership for
Clean Development and Climate, Indo-EU Cooperation etc. India has also signed
a Framework Protocol with the USA for cooperation on the development of Zero
emission Futuregen Project.

41. Conclusion
India targets 9 10% economic growth rate in a sustainable manner over
next 10-15 years. Adequate availability of energy would be sinequanon for
this 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 goal
is to develop these markets and facilitate, through various policy initiatives, their
matured functioning in a competitive manner. Skillful development of road maps
to reach the goal is a challenge. During the period of transition, therefore,
regulatory interventions to harmonize the interests of investors, developers and
consumers, is an approach, which is being pursued by various energy groups. In
most cases, development of energy sector, in various segments, has happened
under government-controlled organizations. Over last 10-15 years, private
investments are being encouraged, particularly in petroleum, natural gas and
power. While India is fully committed to develop and expand its energy markets,
it is equally committed to ensure environmental safeguards. Using latest cost
effective technologies in all the energy segments forms an important part of
policy and strategy.

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