Diesel use in power sector worries ministry

Sanjay Jog
Posted: Friday, Oct 03, 2008 at 0015 hrs IST
Updated: Friday, Oct 03, 2008 at 0015 hrs IST

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Mumbai, Oct 2: The petroleum ministry has expressed serious concern over an increase in usage of diesel in power generation due to the peaking shortage of 14% and energy shortage 10%. The burgeoning use of diesel is also a matter of worry when the Centre bears Rs 14 per litre on diesel amounting to under recovery of Rs 1 lakh crore.

The petroleum ministry in its recent presentation to the Centre has admitted the prices of diesel are kept below market price so that the agriculture and transport sectors are insulated from the unprecedented rise of crude oil prices in the international market. Diesel is considered as principal fuel in Indian economy. About 19% of the diesel is consumed in the agriculture sector upon which food security of the country depends. It was also used by the transport and the industrial sector, the ministry noted.

Regarding the prices of petroleum products, the ministry is of view that in a limited time frame, say 12 to 18 months, prices should be market determined. The entire thrust of policy would fail if this was not achieved and there were subsidies, which went unaccounted.

However, this has not been possible due to inflation. The ministry has already made it clear that even as the crude prices have been falling, it would not be possible to reduce prices of auto fuel as the oil marketing companies continue their under recoveries.

Considering country’s energy consumption forecasts, the petroleum ministry strongly argued that it had to study alternatives that were available and take steps to ensure that India’s progress was not constrained by energy availability. “The National endeavour to bridge the ever increasing gap between sthe demand and supply of energy in India needs to be intensified. For this purpose, efforts concerning exploration of oil and gas need to be supported by other alternate sources of energy like Coal Bed Methane, Gas Hydrates and Under Ground Coal Gasification,” the ministry said.

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