India’s Modernization Case of Energy Sector

India’s ModernizationCase of Energy Sector

Presentation at

International Conference on Development Models of Modernization Processes,

China and the WorldSeptember 24 – 26, 2005

Liuzhou, Guangxi Zhuang AR

P.R. China

By

T L Sankar

Administrative Staff College of India,

Hyderabad, India.

CHINA & INDIA Similarities & Differences

• Most Populous Countries. It is No.2. China is 1.

• Both has unique history of Political stability and a which has continued for over 50 years.

• Both Countries ware very poor when they got Independence and have made commendable progress in many fields.

• Achievements of China are greater in different fields and its GDP has grown much faster and for longer periods.

INDIA-Important Achievements.

• GDP Low Rate of Growth

• Food Crisis

• Foreign Exchange Crisis

• Emerging Energy Crisis

GDP Growth – Story so far

From the dawn of independence, India registered a slow but steady rate of growth of GDP of only 2 to 3 % per year,criticized as the “Hindu-rate” of growth.In the early eighties with some changes in the economic management the growth rate increased to a norm level of 5 to 6%. India is reaching out to a 8% GDP growth in the new millennium.

GDP Growth

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

Rs

. in

Cro

res

India – Green Revolution

• India was among the most successful countries in ushering in the Green Revolution. Food grain production almost doubled from 72 MT in 1965-66 to 129 MT in 1978-79 during the green revolution. Today the production is close to 212 MT.

Agricultural Production in India

0

50

100

150

200

250

MT

Whenever faced with a Challenge, India bounced back stronger and self reliant. From a food starved country in 1967, India became self sufficient in food-grain by the early eighties.

India – Forex Reserves

• With less than $ 2 Billion forex reserves in 1991, the reserves have leapfrogged to nearly $130 Billion due to a series of economic reforms and continued focus on economic development

After Green Revolution, India proved itself again – this time on the Forex Front

Forex Reserves of India

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

Bn

$

From Crisis to Abundance

Source : India Infoline -Economic Survey of India

Per Capita Energy Consumption

Source : BP Statistical Review of World Energy 2004

In spite of this growth, the per capita energy consumption of India is far lower than that of the developed nations and some developing nations. Even to reach world average it has to increase five fold. With a population of over a billion, fast moving towards 1.5 billion, this would be a daunting task with some consequences for the world energy market.

TPES (MtOE)

7.96

4.05

0.96

0.3

1.65

0 1 2 3 4 5 6 7 8 9

World Avg

USA

Japan

China

India

MtOE

Electricity Consumption per Capita (kWh)

14378

8935

1247

526

2571

0 2000 4000 6000 8000 10000 12000 14000 16000

World Avg

USA

Japan

China

India

kWh

India’s approach towards self-reliance in energy could help India & also other countries

Energy Situation

• Major sources of Energy are:• Biomass-used for cooking in rural and poor urban households• Coal – used for heating in industries, power generation and steel-making• Oil -- used in transport,cooking in urban households,in industries and irrigation.• Gas----used in making fertilizer,chemicals, as auto-fuel, as domestic fuel and power generation.• Electricity –used for household lighting,in industries ,in irrigation in transport and all sectors

Item Units 1989-90 1994-95 1999-00 2003-04 Rate of Growth 1989-2003

Traditional Fuels Total

Million tons 234 267 305 340 2.7%

Commercial Fuels

- - - - - -

Total Coal Million tons 208 269 324 381 3.5%

Total Oil Million tons 57 71 103 124 5.7%

Natural Gas Million m3 11172 17339 26885 30900 7.5%

Hydroelectric Million kWh 62132 82727 80853 75242 1.4%

Nuclear Electricity

Million kWh 4625 5648 13249 17980 10.2%

Others (Renewable) etc.

Million kWh 146 769 5294 16121 VeryLow base

Total Primary Electricity Supply

Million kWh 66903 89144 99396 109343 3.6%

Summary Primary Fuel Consumption 1990-2004 (In Primary Units)

Item 1989-90 1994-95 1999-00 2003-04

Traditional Fuels Total 72 83 95 106

Commercial Fuel Total - - - -

Coal 95 121 145 171

Oil 57 71 105 124

Gas 10 16 24 44

Hydroelectric 14.4 19.8 19.4 18.0

Nuclear Electricity 1.1 1.4 3.2 4.3

Others (Renewable) etc. 0.04 0.18 1.27 4.2

Total Primary Electricity Supply 15.5 21.4 23.9 26.5

Total Commercial Energy Supply(sum of 2.1 to 2.7)

177.5 229.4 297.9 365.5

Grand Total Energy Supply(1 + 3)

249.5 312.4 392.9 471.5

Energy Consumption in Oil Equivalent Terms (mtoe)

Year

Coal & Lignite (mtoe)

Oil(mtoe)

Natural Gas

(mtoe)

Hydro-Electric

Generation

(mtoe)

Nuclear & Renewable

(mtoe)

AvailableTotal

supply(mtoe)

Imports(mtoe)

ImportDependency

%

1980-81 58.5 34.0 1.3 10.9 0.8 105.5 23.7 22.5

1989-90 95.0 57.0 10.0 14.4 1.1 177.5 28.4 16.0

1994-95 121.0 71.0 16.0 19.8 1.6 229.4 48.4 21.1

1990-00 145.0 105.0 24.0 19.4 4.5 297.9 84.1 30.0

2001-02 171.0 124.0 44.0 18.0 8.5 365.5 109.0 29.8

India: Commercial Energy Consumption – Import Dependency

Total Commercial

India – Energy Needs 1/2

Several forecasts of India’s energy

needs have been attempted by

different agencies. However, they

have used data of different periods

and the GDP growth rates and

horizons of the forecast vary.

For this presentation, using the latest

data and based on long-term elasticity's,

a new forecast has been attempted.

Period

TPCES mtoe wrt GDP (in 1993-94)

Rs. Crores

Electricity Generated

(utilities+non utilities) Mus wrt to GDP

1980/81-2003/04 0.97 1.241990/91-2003/04 0.80 1.041994/95-2003/04 0.74 0.98

Elasticities experienced by India

TCPES =Total Primary Commercial Energy Supply.GDP = Gross Domestic Product at constant Factor cost .M Units = Million kWh of electricity mtoe = Metric Tonne Oil Equivalent.

PERI0D TPCES

Elasticity

ELECTRICITY

Elasticity

2004-05-

2014-15

0.80 0.95

2014-15-

2024-25

0.75 0.85

2024-25-

2029-30

0.70 0.78

India – Energy Needs 2/2

Based on Elasticities set out, demand for Total Primary Commercial Energy Supply (TPCES) and

Electricity supply have been projected assuming, a GDP Growth of 8% and official population

estimates.

YearPopulation

MnElectricity

Bwh

2004-05 1084 341 6802009-10 1169 465 9812014-15 1259 634 14152019-20 1356 848 19662024-25 1461 1135 27312029-30 1573 1490 3700

A comparison of the rates of increase of supply of energy in the past with the rates required as per

the forecast is set out in the table below :

Period TPCES Electricity Generated (Utilities+non utilities)

1980-2003 (Actual)

5.1% 6.9%

2004-2019(Reqd.) 6.2% 7.3%

2020-2030

(Reqd.)

5.8% 6.6%

The demand forecast suggest that the effort in supplying total primary energy consumption in the next decade would be about 1% higher than in the past it was around 5%. This will call for some concerted effort.

Forecast of Energy Demand - Indices

0

100

200

300

400

500

600

2004-05 2009-10 2014-15 2019-20 2024-25 2029-30

Population

TPES

Electricity

TPCES

India – Specific Fuel Needs for Non Power usesThe important commercial energy sources are Coal Oil ,Gas and Electricity. Power is generated

from primary sources namely, nuclear, hydro and renewable and as thermal electricity from fuel

sources namely coal and natural gas.The demand for oil,gas and coal for non-power uses and

production of electricity from primary sources are first estimated. The coal and natural gas

requirements for power generation are added, to derive the total fuel needs including for power

generation.

Fuel Needs for Non Power use

Year Coal MMT Oil MMTNatural

Gas BCM2004-05 109 127 212009-10 130 152 252014-15 156 181 302019-20 186 216 362024-25 222 259 432029-30 265 309 51

Past Rates of Growth of fuel supplyYear 1970-80 1980-90 1990-2003Non-power-Coking Coal 3.62% 2.75% 0Non power-Non Coking coal 1.96% 2.34% 2.04%Non Power Oil products 5.40% 6.00% 4.90%

Based on these growth rates, and adjusting for a higher 8% GDP

growth, the specific fuel needs for non power uses are projected.

Fuel needs for Non Power Use

0

50

100

150

200

250

300

350

2004-05 2009-10 2014-15 2019-20 2024-25 2029-30

Coal MMT

Oil MMT

NaturalGas BCM

Non Power Gas 8.90% 23.00% 8.20%

Power generation-non fuel modes of productionThe preferred source for power generation should be non-fuel sources - hydroelectric sources, nuclear wind, solar& other renewables. Production from non-fuel sources, however, is constrained by a few factors:

•Nuclear – Policy constraints, uranium availability, likely date of commercializing fast breeder reactors or thorium based cycles.•Hydel – Adequate investigations, obtaining environmental clearance, making R&R arrangements•Renewable – Snags in technology, high costs

The following targets have been adopted by for this exercise: •Nuclear cumulative capacity 25,000 MW by 2030.•Hydel – 20% of total power generation by 2030.•Renewable – 5% of total electricity generated by 2030.

Non- Fuel based Power Generation

Total

Electricity

Supply Reqd (a)

Hydro –(20%)

(b)

Nuclear -

(c)

Fuel Based

=(a)-(b)-(c)-

(d)

2004-05 680 136 15 29 500

2009-10 981 196 25 49 711

2014-15 1415 283 41 70 1021

2019-20 1966 393 66 98 1409

2024-25 2731 546 108 136 1941

2029-30 3700 740 175 185 2600

Year

Billion kWh.

Renewable(5%)(d)

Non Thermal Thermal

The fuel needs or forecast is done by first deriving the electricity likely from Non -fuel sources and then estimating the share of different fuels in power generation

India Fuel Needs for power Coal continues to be preferred fuel for power generation. There are additional factors in favour of coal

• Predictability of future prices is higher in coal than in gas.• Long term fixed price contracts indexed to labour costs are possible in case of coal.

However, the recent shortages have led to a view that coal will not be available to support the power

development fully. Natural Gas will be the alternative.

Scenario – I Gas based generation would be as at

present, 13% of total thermal generation and rest 87%

will be from coal.

Year Total Thermal Electricity (BkWh)

Coal based

BkWh

Gas based

BkWh

Coal Req.

MMT

Gas Req.

BCM.

04-05 500 425 75 297 15

09-10 711 605 106 424 21

14-15 1021 868 153 609 31

19-20 1409 1198 211 839 43

24-25 1941 1650 291 1155 58

29-30 2600 2210 390 1547 78

Scenario-II Coal production will be constrained to a

growth rate of 5% considered as easily achievable and

the rest of power requirement would be using gas.

To arrive at total fuel needs of India, two alternative scenarios are developed.

Year Total Thermal Electricity (BkWh)

Coal based

BkWh

Gas based

BkWh

Coal Req.

MMT

Gas Req.

BCM.

04-05 500 370 130 259 26

09-10 711 493 238 331 47

14-15 1021 609 418 422 84

19-20 1409 769 640 538 128

24-25 1941 984 957 683 191

29-30 2600 1253 1347 877 269

Energy Demand Scenarios The total energy requirements both primary and secondary are summarized under the two scenarios. if India does not produce coal as required gas imports will have to substitute coal and this will increase the electricity price in both scenarios.

Scenario-I

Scenario-II

Year Coal

(MMT)

Oil

(MMT)

Natural Gas (BCM)

Total Electricity

(BkWH)

2004-05 406 127 36 680

2009-10 554 152 46 981

2014-15 764 181 61 1415

2019-20 1025 216 79 1966

2024-25 1380 259 101 2731

2029-30 1812 309 129 3700

Year Coal

(MMT)

Oil

(MMT)

Natural Gas (BCM)

Total Electricity

(BkWH)

2004-05 368 127 47 680

2009-10 461 152 72 981

2014-15 578 181 114 1415

2019-20 724 216 164 1966

2024-25 909 259 234 2731

2029-30 1142 309 320 3700

MMT = Million TonnesBCM = Billion Cubic MetersBkWH= Billion Units of Electricity.

16

• Wind Potential 45000 MW• Potential exploited 1267 MW

•Tamilnadu 787 MW•Gujarat 166 MW•Andhra Pradesh 89 MW•Karnataka 37 MW•Kerala 2 MW •Madhya Pradesh 22 MW •Maharashtra 155 MW

•Hydro Potential 15000 MW• Himachal Pradesh 1624 MW• Uttar Pradesh 1472 MW• Arunachal Pradesh 1059 MW• Karnataka 652 MW• Maharashtra 599 MW• Kerala 466 MW• Madhya Pradesh 410 MW• Bihar & Zarkhand 367 MW

•Potential exploited 1341 MW

• Oil Reserves 732 Mn Tons• Gas Reserves 763 Bn Cu Mtr• Reliance Gas find 198 BCM• Cairn Gas Find 28 BCM• Present gas prod 30 BCM pa

Oil & Gas

• Coal Reserves 246 Bn Tons• Jharkhand 71.14 Bn Tons• Orissa 59.10 Bn Tons• Chattisgarh 38.13 Bn Tons• Total Coal Mines 561• Present production of Coal &

Lignite in excess of 389 MT pa

Coal

•Biomass Potential 3500 MW• Maharashtra 1000 MW• Uttar Pradesh 1000 MW• Karnataka 300 MW• Andhra Pradesh 200 MW• Gujarat 200 MW• Punjab 150 MW

•Potential exploited 272 MW

Biomass

Small Hydro

Wind

• Municipal Potential 1000 MW• Industrial waste potential 700 MW• Projects implemented 9.5 MW• Projects under const. 5.2 MW• Projects under dev 21 MW

Waste

Sources of Energy

India has all forms of energy resources and they are available in all parts

Depth Ranges in Meters

Assessed Resources

TotalProved Indicated Inferred Prognosticated

0-300 63.2 40.8 7.1 2.2 113.3

300-600 5.8 21.5 6.5 13.9 47.7

0-600 (Jharia Only) 13.7 0.3 0.0 0.0 14.0

600-1200 m 1.7 6.4 1.7 19.7 29.5

Total 0-1200 84.4 69 15.3 35.8 204.5

Estimated Assessed Coal Resources (Billion Tons)

a

Coal Sector Modernization 1/2

• India Third largest producer of coal 400 mt/yr. China 1st – 2000 mt/yr. USA 2nd 100 mt/yr.

• Deposits are: 8.6 % of the world, China 12 %, USA 25 %.• Mining Coal began in India in 1774 for steam trains.

• On date independence around 50 mt/year from over 3000 mines, mostly private.

• 1971-73, all coal mines were nationalised and consolidated.

• From 1975, coal for railways got reduced to near zero today. But coal for power generation increased.

Modernization Efforts So far

• Only two major public sector Coal India Limited (CIL)

and Singareni Colliery Company Limited. (SCCL)

• Production in 2003-04 is around 400 tonnes

• Projected demand in 2029-30 in 1242 (Low Coal

Scenario) 1812 (High Coal Scenario).

Coal Sector Modernization 2/2

Coal Sector – Strategies for FutureA committee under T L Sankar is examining the following:* India is the third largest producer of coal with 400 mt/yr. China leads with

2000mt/yr distantly followed by USA as second with 1100mt/yr. All three are planning to increase coal production in the next two decades. If India produce and uses 1800mt in 2029-30, the CO2 emission would be about 5.5 billion tonnes – lower than current US pollution and one third of US in per-capita terms.India should use more coal but produce and use it in a responsible manner, keeping local and global pollution efforts to the minimum.

* Pending the Parliament passing the Coal Mines Nationalization(Amendment) Bill,various measures for liberalizing captive coal mining provisions.

• Use of modern technology to augment productivity and quality• Adoption of clean coal technologies, such as IGCC, Carbon sequestration etc.• Create competition among public sector coal companies at the State and Central

level.• Rationalization of railway freights• Creating a vibrant coal trade involving imports exports and internal trade

through e-auction and commodity trade channels.

Area Crude Oil(Million Tons)

Natural Gas(Bullion Cubic

Meters

On-Shore 308 301

Off-Shore 352 462

Total 660 763

Average annual production

33 29

R/P Ratio 20 26

Oil and Gas Reserves

a.

Oil Sector Modernization 1/2• In Pre-independence days oil was extracted very small

quantities in Assam by British owned oil companies.• In 1955, Oil & Natural Gas Commission was

established by Legislative sanction.• With mainly USSR assistance oil exploration was done

on shore and off-shore.

• In early Seventies, Bombay High off-shore discovery increased crude production to over 30 mt/yr.

• From 1990, India adopted a liberalised economic policy & private companies were given exploration and development leases under NELP.

• Production of oil has stagnated around 30 mt/yr.

• Production of Gas has increased as shown in table.

Oil Sector Modernization 2/2

• Oil production were imported and marketed by private oil companies, Burma Shell, Caltex etc.

• Indian Oil Company was established in 1959, to import crude and refine it to products. This has expanded its capacity to about 55 million tonnes throughput

• Private oil companies were nationalized I 1976 but continued as separate companies to provide a competitive market.

• Private agencies can establish refineries and the one fully private refinery is the largest single unit refinery with 20 million tonnes throughput.

Petroleum India is the sixth largest oil consumer in the world with a share of 3.1% of the world consumption. The dependence on import for oil has reached a level of 72%.

The crude refining capacity of India today is at 132 MT. India has achieved self sufficiency in refining, at the present demand level.

0.26 0.456.82 10.51

33.02

8.2919.14

32.26

57.75 33.37

32.43

3.46

106.97

116.01

0

20

40

60

80

100

120

140

1951 1956 1961 1966 1971 1976 1981 1986 1991 1996 2001 2006

Years (1951-2004)(Production and Consumption Figures Pertain to the Year Ending of the Concerned Financial

Year)

Millio

n T

on

nes

Domestic Crude Oil Production Domestic Crude Oil Consumption.

Oil Pricing& Subsidies • Problem• Crude is imported-products are not

imported or exported ,except marginally. Product prices are revised with reference to the average of two price publications.Index of product price has risen faster than crude price.Refiners get windfall gains!

• Duties & taxes are ad-valorem and increase retail prices further.!

• Diesel & kerosene price difference leads to large scale adulteration. Kero subsidy is not focussed on BPL population.PDS is defunct in many places.

• LPG benefits commercial establishments

– Possible Actions• Product price should be indexed to

crude price allowing a good Gross Refinery Margin.

• Duties and taxes should be fixed w,r.t quantity and adjusted on a half-yearly basis to absorb part of the oil price increase shock.

• Market retail price of kerosene and diesel should be equal .The BPL families would get Kero-coupons and collect kerosene at a lower price with coupons which could be encased by oil companies.

• Misuse of subsidized LPG should be ruthlessly weeded out.

Natural Gas-Strategies for FutureNatural Gas production stands at 32 BCM per annum and the reserves at 922 BCM

Growth in Production of Natural Gas (BCM)

1.4 2.4

18

29.5 29.7 31.4 32

0

10

20

30

40

1971 1981 1991 2001 2002 2003 2004

Figure 3.5: Reserves of Natural Gas (BCM)

62.29

410.65

729.79 762.95 750.71853.48

922.8

0100200

300400500600700

800900

1000

1971 1981 1991 2001 2002 2003 2004

• After a major jump in the production of

natural gas in late 90s, the production has

stagnated• The new gas finds especially in deep off

shore wells have added reserves of

another 195 BCM in Reliance and 560 BCM

in GSPC Fields.ONGC has not disclosed

the reserves . These are yet to be certified

by DGH.

• The new exploration by all agencies including ONGC is delaying the development of the gas fields in the hope that there will soon be a severe shortage of power and gas at high cost will be purchased by power generators.Even signed agreements are dishonored with impunity !

Natural Gas – Demand Supply-price nexus

Year Demand Supply

2004-05 36 34

2009-10 41 57

2014-15 52 85

2019-20 68 103

2024-25 85 ?

2029-30 113 ?

This demand-supply is on Business-as usual basis..New finds of gas deposits and promise of more have raised hopes of increased use of gas for power generation. India’s unique location of being close to some of the world’s largest gas deposits in Qatar, Oman, Iran and Central Asia has raised hopes to get piped gas or LNG from these sources. The price of gas defines the sectors and levels of use. At $4 per MMBTU and above gas can be used only in fertilizer, petrochemical and as auto fuel and domestic fuel. If the price of imported gas is about $3 per MMBTU, gas can substitute coal for power generation and its demand can become very large.Market rumours are that oil ministry is keen that gas prices settle at a high level !

BCM

Indian Nuclear Power Programme

14 reactors at 6 sites under operation 2770 2,770

6 PHWRs under construction 1,960

2 LWRs under construction 2,000

PFBR at Kalpakkam 500

Projects planned till 2020 13,900

TOTAL by 2020 21,180

CAPACITY MWe

India plans to have an installed Nuclear power capacity of about 21,180 MW by 2020

India’s Nuclear Power Programme is designed with the long term objective to serve as the source of electricity when other sources get exhausted. It is a key element of the energy self reliance strategy.In is dependent on developing technologies to use fuel breeding fast breeder reactors and Plutonium thorium mix as fuel.For this we may have to use imported fuel in about 7000 Mwe capacity.

Hydro Power India holds a potential to the tune of 150,000 MW of low PLF

Installed capacity today is 23,488 MW -just about 17% of the potential.

GOI in a recent exercise, Hydro Electricity Initiative, has made a comprehensive l survey of all potential hydroelectric sites for 50000 MW capacity and has identified 7000 MW projects which can deliver power at less than Rs 2.0/Kwhr.

India has established mutually beneficial arrangements with Bhutan where projects constructed mostly with Indian capital are handed over to Bhutan Government for management and power is purchased at mutually agreed rates. About 300 MW is being purchased and a new project with over 1000 MW will be ready by 2006 . Further potential is over 10000 MW for imports from Bhutan. Nepal is also likely source for over 20000 MWs

The possibilities of developing power generation from multiple sources and the opportunity to import hydel power from neighbouring countries suggest that achievement of the required level of power supply is within reach.

Potential Potential Exploited

Solar Energy 5x10 whr/yr 47 MW

Biomass-based power 17,000 MW 484 MW

Small hydro 15,000 MW 1509 MW

Wind Energy 45,000 MW 1870 MW

Ocean Thermal 50,000 MW --

Sea Wave Power 20,000 MW --

Tidal Power 9,000 MW --

a

Renewable Energy Potential & Achievements March (2003)

Growth of Power Sector

Sl Description 1950 2005

1 Installed Capacity (MW) (30.8.2005) 1564 1,21,775

2 Energy Generated (mKWh) 5100 5,58,336

3 Villages Electrified (Nos.)(31.12.2004) 3061 4,97,133

4 Percentage of Villages Electrified (%) 0.54 84.7

5 Households Electrified (Lakhs)(55%) - 1073

6 Population Served (Lakhs) - 3693

7 Irrigation pumpsets energized (Nos)* 21008 142,90,457

8 Consumers (Million) - 130.60

9 Per capita consumption (kWh) 15.6 592* 31.12.2004.

Power Sector - Reform Progress

1948 Electricity (Supply) Act -Central Electricity Authority (CEA) and the state Electricity Boards.

1959-60 Growth of State Grids.

1964 Regional Electricity Boards formed.

1974 Independent Ministry of Power

1975 CEA as a separate entity

1975 Central PSUs established

1980-88 Regional Grids Growth

1989 Power Grid Corporation of India formed.

1991 Private Sector invited to Electricity sector

1998 Electricity Regulatory Commission

2000 APDP

2003 Electricity Act, 2003

2005 National Electricity Policy

Generating Capacity (August 2005)

Thermal 80562 MWHydro 31745 MWNuclear 3310 MWRES etc. 6158 MW

--------------------Total 121775 MW

Power Sector : Current Scenario

Mode-wise breakup:

Installed Capacity under State, Centraland Private Sector

(31.01.2005)Sector wise Generating Capacity

Power Sector : Current Scenario (Contd.)

Sector Thermal

(Including Gas)

Hydro Nuclear Wind

Etc.

Total

State 41898 24802 - 3496 70197

Central 29427 6032 3310 - 38769

Private 9237 910 - 2662 12809

Total 80562 31745 3310 6158 121775

Central32%

State57%

Private11%

7019738768

12809

Power Sector : Current Scenario (Contd.)

• Regional Grids in operation.• Moving towards National Grid.• Regional Transmission Capacity

– over 8000 MW.• Demand Supply Gap.

Energy – 8%.Peak Demand – 12 to 16%.

Reform Architecture

Regulatory Reforms.New Regulatory Framework:

Establishment of CERC & SERCs.

Restructuring Initiatives.

Restructuring of the Power Industry especially

the State Electricity Boards.

Regulatory ReformsElectricity Regulatory Commission Act, 1998 and

Electricity Act, 2003.

Independent and autonomous Commission to

regulate the electricity sector.

Government role limited to that of a policy maker

and a facilitator.

Central Electricity Regulatory Commission (CERC).

State Electricity Regulatory Commission (SERC).

Restructuring Options: Functional Unbundling

• Responsible for Power Generation.• Setting up new Generating Stations.

• Management of entire Transmission System.• Purchase and bulk supply and wheeling.• Grid operation.

• Management of existing distribution system.

• Extension of supply to new consumers.• Bulk purchase and retail sales.

Generation Co.(s)

Transmission Co.

Distribution Co.(s)

Consumers

Advantages of Unbundling on Functional Basis

Individual activities will get proper focus for development.

Provides transparency and accountability in the performance of different functions.

Promotes Competition or yardstick competition in the functioning of various units.

Electricity Act, 2003

Generation de-licensed.

Captive generation liberalized.

Distributed generation encouraged.

Open Access on Transmission lines.

Open Access in Distribution.

Trading in power.

Removal of Exclusivity in Distribution license.

Electricity Act, 2003 (Contd.)

State Government shall establish a State Load

Despatch Centre (SLDC).

State Load Despatch Centre shall not engage in the

business of trading.

State Government may notify the Board or a

Government company as the State Transmission

Utility (STU).

STU shall not engage in the business of trading.

Power Sector-Continuing Challenges.

.

.

• CHALLENGES

• With the enactment of the Electricity Act 2003 the legal & Institutional problems resolved.

• Managerial and governance problems remain:

- Inadequacy of supply

- High T&D losses

-Poor quality of supply

-Total lack of consumer

concerns

-Irrational tariffs

-Metering and billing

inefficiency

•

POSSIBLE SOLUTIONS• Encouraging Generation investment in all

sizes of plants.• Aggressively promoting Captive power

generation by clarity in regulation of open access & surcharge.

• Enforcing franchisee system at sub-station or feeder level involving consumers,

• Introducing total transparency in distribution through publishing a)Feeder level daily energy flows

b).All info on the connected load and total collection of revenue under each feeder and list of customers with pending bills of > 3months

c) Daily feeder-wise interruption report CAIDI should be published.• Spot billing with instantaneous printing.•

*

Today the energy scene in India is admittedly disappointing. A crisis is brewing.The wakeup call has been given India has started responding.

We have the material resources. We have a competent technical man-power of adequate quality and quantity. We have the appropriate leadership at the top. India’s Prime Minister is arguably the most erudite and honest leader in the World. He has the reputation for having steered India over the forex crisis.

We are acutely aware that managing the emerging Energy Crisis involves: -managing Oil imports – how much would depend on actions taken towards conservation of oil in transport sector, introduction of new mass transport, and development of environment friendly cost effective bio-liquid fuels. - improving efficiency of power sector,in respect of governance, modernization and professionalization and - introducing appropriate reforms in the coal sector including environment policies to accelerate coal production. Achieving these would not be easy. But,The will to overcome the crisis is emerging .

Summing up

My Vision : India Energy 2050

• There will be adequate power of appropriate quality sold by competing producers, traders and suppliers. Poor householders and agriculturalists will have coupons with a monetary value given to them personally which they can use to purchase from any source. All consumers can have a choice of suppliers.

• All renewable energy technologies will be viable. India will produce power from Wind,water and sun in plants of all sizes. Large power plants using hydro electric resources, Coal and safe Nuclear technologies using Thorium will produce huge quantities of power.

• Open access will be available on all EHV,HV and even major distribution lines.Transmitting power will be like traveling along Highways with tolls.

• Utilities will sell power to groups of consumers under a feeder line.This group can choose to buy from a number of any competing power supplier.

• Oil use will be reduced to the maximum by use of fuel efficient and hydrogen based cars and by Bio-fuels which by then could totally replace petrol and diesel.

• Energy use will adopt 100% efficient practices in all sectors.

• Every drop of water will be used wisely.

• Every adult would have a useful employment and public role.

Last Words.

We were challenged by Hindu-rate of growth, we have over come !

We were challenged by Food Crisis, We have overcome !

We were challenged by Forex Crisis, We have overcome !

Now, we are being challenged by Energy Crisis,

We shall overcome !

THANKS

I can only end with the hope which keeps me going.