The government’s mishandling of the energy sector has stymied domestic production of coal, crude and natural gas. The domestic production of coal, which is the predominant source for power generation, has gone up by only 3.73% CAGR between FY06 and FY14. It is the oil and gas production data which brings out the most worrying signs, especially because the NDA government too has abstained from taking steps that could remove impediments choking the oil and gas sector.
The latest energy statistics released by the CSO show the production of crude has stagnated at 38 million tonnes since FY11 and gas production has dropped to 35.41 billion cubic meters (BCM) in FY14 after reaching a peak of 52.22 BCM in FY11. However, consumption of energy has gone up—coal by 3.85% CAGR between FY06 and FY14, and crude by 6.14% in the same period. The growing gap between demand and domestic supply is being met by imports.
Gas production in the country has been marred by the absence of remunerative pricing mechanism and litigations. Thanks to the government decision not to accept the Rangarajan’s gas price of $8.4 per mmBtu and the decline in the global oil prices, gas prices today are $5.17 per mmBtu. So, getting firms to explore at this price in deep seas is next to impossible.