Speaking to FE, Dr Parikh said that the energy sector in the country would be integrated in the true sense of the word only if the existing pricing distortions were corrected. We need to establish a system of rational pricing for all energy sectors, he said.
Citing an example, Dr Parikh pointed out that the price of coal was artificially high because of high freight costs which in turn was a result of cross subsidisation by the Railways. This made coal relatively expensive compared to subsidised products like natural gas and negatively influenced consumer choice, he added.
While the governments initiative to link petro prices to international prices was a welcome move, Dr Parikh said that the initiative was incomplete till prices of competing products like natural gas and other fuels were also linked to international prices.
Other members of the Integrated Energy Policy Committee will be finalised next week, he said, adding that he had been asked by the government to submit the policy in six months time. On the issue of energy security, Dr Parikh said that it was important to examine all options to arrive at the most cost-effective solution. He did not rule out the possibility of going in for a mixture of options which could include holding strategic oil reserves, securing overseas oil equity, building dollar reserves and buying future options.
While hydro-energy and nuclear energy both hold a lot of potential, the Planning Commission member pointed out that the issue of environmental costs also had to be addressed. A balance has to be struck, he said.