Need to examine subsidies & taxes in energy sector: PM

New Delhi, July 26 | Updated: Jul 27 2006, 05:30am hrs
Prime Minister Manmohan Singh on Wednesday underlined the need to restructure taxes and duties besides examining the relevance of subsidies in the energy sector.

He said the extreme volatility in global oil markets and the subsequent increase in prices of natural gas and imported coal had put enormous pressure on domestic energy prices.

Addressing the energy conclave on implementing the integrated energy policy, Singh said, Pricing policies play an important role in consumers selection of energy sources. We must examine the relevance of the entire gamut of taxes and subsidies on various energy forms and energy using devices.

Expressing concern over the mounting losses in the power sector, Singh called for a new management strategy to deal with the situation in the energy sector. There are transmission and distribution losses as high as 40-50% in several parts of the country and the new management system will have to deal with this harsh reality, he said.

Looking at the requirement of energy in India in the next 25 years, Singh said the power sector alone would need Rs 60 lakh crore and such scale of investment would come only when there are proper returns.

Referring to the integrated energy policy, Singh said the energy requirements by 2030 have been estimated to be higher than existing level by a factor of anywhere between 4 and 5, if the Indian economy grows at around 8%.

The figures for future requirements are gigantic. Electricity generation capacity would need to go up from our current installed capacity of a 131,000 mw to 800-950,000 mw. This would imply huge annual imports of oil anywhere between 300 to 400 million tonne and coal imports that could touch 800 million tonne annually, he said.

Can we afford to follow this energy path How can we ensure that such vast quantities of energy are available to us What would be the investment and foreign exchange requirements Raising these questions, Singh said India urgently needs to define a new paradigm of development for its energy sector.

And this paradigm would have to focus on both the demand side and supply side. This calls for judicious use of available domestic resources and focus on efficiency at all levels, he said.

On the nuclear energy development, Singh said, The speed with which we can develop nuclear power is constrained by the availability of uranium. The civil nuclear agreement we have entered into with the United States, and our discussions with the nuclear suppliers group, should help in accelerating the development of nuclear energy.