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Saturday, 27 December 2008

Cabinet gives go ahead for an integrated energy policy

NEW DELHI: The Union Cabinet on Friday gave its nod to the integrated energy policy that seeks to chart out a roadmap for energy security to achieve sustainable growth over a reasonable period.

The policy, prepared by the Planning Commission, is aimed at optimal exploitation of domestic energy resources while exploring and acquiring assets abroad to attain energy security for the country.

Briefing the media here after the Cabinet meeting, Home Minister P. Chidambaram said: “India needs to sustain an economic growth of at least nine per cent over the next 25 years if it is to eradicate poverty and meet its larger human development goals”. For this purpose, “it is necessary to evolve an integrated energy policy that provides a coherent framework of policy covering different energy sources in a consistent manner,” he said.

Among other things, the policy objective is to make energy markets more competitive through market-determined energy pricing and resource allocation along with transparent and targeted subsidy disbursal and improved efficiency. It also calls for appropriate energy pricing to promote investment in augmenting supplies.

While giving its approval, the Cabinet has also taken care to ensure that the policy is actually executed. “It has been decided to set up a monitoring committee under the chairmanship of the Cabinet Secretary for reviewing the progress of implementation of the policy,” Mr. Chidambaram said.

The integrated policy’s broad vision is to meet the demand for energy services throughout the country reliably with safe, clean and convenient energy at least cost. The policy has suggested that energy security can be ensured by augmenting the domestic energy resource base and maintaining reserves equivalent to 90 days of oil imports.

Also, building a strategic stockpile of nuclear fuel and acquiring energy assets abroad would play a role in ensuring energy security, it said.

As for taxes and subsidies, the policy has maintained that tax structures and the regulatory philosophy for the sector should provide a level-playing field to players, whether public or private while stressing that the subsidies should be transparent and targeted to the intended beneficiaries.

For public sector undertakings (PSUs) engaged in the energy sector, the policy has advocated autonomy and full accountability to ensure incentives for investment through their own resources and improvement in efficiency.

Turning to specific energy sources, the policy has pitched for phased adjustment of domestic-to-trade parity prices for petroleum products over a relatively short period. For coal, it said that prices should be left to the market.

For natural gas, however, the policy’s trade parity principles are altogether different as the fuel requires substantial investment in pipeline or, alternatively, in liquefaction, cryogenic shipping and re-gasification.

The price of natural gas, it says, can be determined through competition among different producers where multiple sources are available in a competitive supply-demand balance.

Source : The Hindu

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