Key consumers India, China must use clout to curb energy prices

INDIA should be able to flex its growing economic power to keep global fuel prices moderate, energy sector CEOs and government officials said at the feRound Table Conference with NDTV Profit this evening. Speaking on the occasion, power minister Sushil Kumar Shinde declared the government’s intention to ensure that a power shortage does not obstruct the economy’s 8 per cent plus growth rate. On a day when crude oil prices hit a high of $102 a barrel and LNG spot prices touched $ 21 per mmbtu (million British thermal units), Petronet LNG chief executive officer P Dasgupta said that since India and China are emerging as the top energy hungry economies of the world, they have the potential to influence the world market’s pricing signals to a considerable extent. He added that alternatives the Centre should consider are dual pricing and the creation of a gas pricing hub, to ensure economies of scale.

ONGC chairman and managing director R S Sharma said that India is bound to be impacted by the hike in global prices. So an alternative has to be found. “Moreover with the price of exploration touching the sky, there is no way we can sustain the earlier prices.” Power Finance Corporation (PFC) chairman and managing director V K Garg and NTPC CMD T Sankaralingam, too, argued in favour of the dual pricing mechanism and pooling of gas prices. According to power secretary Anil Razdan, gas pricing has to take into account the needs of the poorer sections of the population too. He said that there is no way the government can afford to ignore these considerations. High gas prices mean that power plants depending on gas as input face higher unit prices of electricity. The issue needs to be handled by the regulator to ensure that there is equity in pricing.

According to Hinduja Group executive vice-chairman Subir Raha, “This is a global market and we are part of it. Hence, there is a need to play business the global way. S Sundaresan, additional secretary in the ministry of petroleum and natural gas, added that “the government should target subsidies and make them transparent”. Razdan, however, pointed out, “In an effort to meet growing demand, power production has to grow at the rate of 8 per cent and this can be done by maximizing indigenous production, increasing efficiency and utilising existing assets at full capacity.” Coal secretary H C Gupta said an alternative was to use coal. Till now, nearly 90 per cent thermal power plants use coal and the government is pushing for deeper exploration of coal blocks.

The power minister said that the government is trying to ensure a way out by stressing on hydro-power, which would cut down on the environmental damage associated with coal usage while meeting the needs of the economy. He was upbeat about capacity addition of an estimated 78,577 MW in the Eleventh Five-Year plan, which is far more than what had been achieved in the last three five-year plans. Of this, orders for over 60,000 MW have already been placed while projects with capacities of 7,000 MW been commissioned, he said.