I am writing this article by the light of a gas lamp in my home in the forest sanctuary of Binsar in the hills of Kumaon.?The sun has set, and the pinpricks of light in the valley below testify to the march of development.?Every year, the valley is brighter than the year before.?But the blanket of darkness that swaddles?the area exemplifies also the distance yet to be covered.?The majority of villages are not connected to the grid; the LPG cylinder is a promise seldom kept; subsidised kerosene finds its way more often than not into the generators of the relatively wealthy than into the lanterns of the poor; solar lighting is an option, but it has disappointed because of poor and erratic service.?The forests of Binsar are thick, but if the energy situation remains as it is today, it will inevitably suffer degradation.?What is now required is a multipronged energy solution within an integrated and holistic framework.?And someone who can galvanise action across all fronts.
Against the backdrop of $100-plus price of oil and the associated challenge of global warming, many energy import dependent countries have enunciated their vision for an energy future.?The US has, for instance, promulgated a new Energy Security and Independence Act. The Act?mandates that by 2022, the country must replace one million barrels of transportation gasoline per day by its equivalent in? biofuels.?And that?the average fuel efficiency of passenger cars and light trucks sold in the US must be 35 miles per gallon (mpg) as against the current standards of 27.5 mpg for cars and 22.2 mpg for light trucks.?The EU has prescribed a 20:20:20 vision. It aims to reduce?greenhouse gas emissions by?20% over the 1990 levels; to improve energy efficiency by 20% over current levels and to?increase the share?of renewables in the energy consumption basket to 20%?all this to be achieved by 2020.?
We stand out as an exception.?The Planning Commission has prepared an integrated energy policy document but there is little evidence that its contents are the touchstones of the energy policy.?There is certainly no one energy czar in the country with the executive mandate to pull together the divergent threads that originate from the five ministries handling energy related issues (ministries of petroleum, coal, non-conventional, atomic and power).
In this context, I was somewhat disappointed by the Budget speech.?The FM did in the main offer a pragmatic and balanced Budget.?He walked well the tightrope between the pressures of an election year and the importance of maintaining the momentum of growth.?But in the specific context of energy, he disappointed me by not grabbing the opportunity of his national platform to spell out the contours of an energy future.
I accept that the Budget speech is not the occasion for a digression on energy. And?that the FM is not the responsible minister to set the direction of energy policy.?But given that the speech is the closest we have to a nationally televised ?state of the union? address, and given the? criticality of this issue, I had hoped it would include a set of specific fiscal incentives and investment proposals that move us more aggressively in the direction of a non-fossil fuel future.
My disappointment was compounded by the fact that the FM did touch on all of the critical issues.?But that was it.?He did not place any of it within an integrated energy framework.?On the contrary, as the subsequent reading of the Finance Bill suggests, the Budget speech may have been no more than sound rhetoric. It alluded to the importance of intensifying oil & gas exploration, for example.?It pointedly pronounced on the?billions of incremental dollars expected to flow in under the new exploration licensing policy round (Nelp VII).?The Finance Bill 2008 has, however, purportedly?removed the seven-year tax holiday on the profits to be earned from the production of natural gas.?Given that the notice inviting offers (NIOs) for exploration under Nelp specifically mentions this tax holiday; given that it is not possible to ascertain ahead of physical drilling whether the discovered hydrocarbons will be oil, gas or oil associated with gas, and given that the bulk of recent discoveries has all been gas, this inherent contradiction between the pronouncement in Parliament and the subsequent fine print is intriguing, to say the least.?
The FM is not the custodian of India?s energy policy, but in the absence of any such custodian, it would not have been out of line for him to use his privileged access to the nation to galvanise the government, corporates and civil society down the path of sustainable energy solutions.? For, clearly, if such solutions are not found soon enough, the villagers of Binsar will continue to suffer.?
The author is chairman of the Shell Group of Companies in India. These are his personal views