The Hindu : Business : Draft recommends rationalisation of fuel pricing

Online edition of India's National Newspaper
Friday, Dec 16, 2005

Business

Business

Draft recommends rationalisation of fuel pricing

Special Correspondent

`Pricing plays a major role in the choice of fuel and the form of energy consumed'

NEW DELHI: The draft Integrated Energy Policy prepared by an expert group headed by Planning Commission Member Kirit Parikh has recommended rationalisation of fuel prices with taxes levied in such a way as to bring about trade parity pricing of all commercial primary energy sources.

"Prices of different fuels should not be set independently of each other... All commercial primary energy sources must be priced at trade parity prices at the point of sale," the draft said.

Briefing newspersons here, Mr. Parikh said according to the draft policy, since relative pricing played a major role in the choice of fuel and the form of energy consumed, the Central and State-level taxes on them should be restructured to offer optimal choices in the selection of fuel and investment decision.

Noting that coal will remain the primary energy source for years to come — till about 2031-32 — the draft policy has favoured coal imports while calling for stepping up domestic production. "We need to facilitate coal imports... Imports also put a competitive pressure on the domestic coal industry to be efficient. Imported coal is far more cost-competitive than imported gas for power generation," the draft said.

Domestic coal production, the draft said, should be stepped up by allocating coal blocks to Central and State undertakings as also for captive mining by notified end users.

"Coal blocks held by CIL [Coal India Limited] which CIL cannot bring into production by 2016-17, either directly or through joint ventures, should be made available to other eligible candidates for development and bringing into production by 2011-12," it said. The draft noted that for a sustained growth of eight per cent through 2031, the country's primary energy supply has to increase three to four times and electricity supply by five to seven times when compared to today's consumption levels. Besides, the quality of energy supply has to be vastly improved. "The energy challenge is of fundamental importance to India's economic growth imperatives,'' the draft said.

On power sector reforms, the draft said that the focus should be on control over aggregate technical and commercial (AT&C) losses of State power utilities. "Only financially healthy State power utilities can sustain the growing public sector units and provide the needed comfort on payment security to attract private investment in the power sector at internationally competitive tariffs," it said.

On nuclear power capacity, the draft noted that even if a 20-fold increase took place by 2031-32, its share in the country's energy mix would be about five to six per cent. "Nuclear energy, theoretically, offers India the most potent means to long-term energy security," it said.

Printer friendly page
Send this article to Friends by E-Mail

Business