Market pricing a must for India to hike energy output: PM
03 December 2013
India needs to increase its energy supply by three to four times within next two decades as it heads towards becoming the world's third largest power consumer – and to achieve this, market-based gas pricing and technology are a must, Prime Minister Manmohan Singh said today.
Inaugurating the 8th Asia Gas Partnership Summit organised by gas distributor GAIL Ltd and the Federated Indian Chambers of Commerce & Industry (FICCI) in New Delhi, the prime minister said India currently ranks as the world's seventh largest energy producer, accounting for just about 2.5 per cent of the world's total annual energy production, while it is the fourth-largest energy consumer behind the US, China and Japan.
With oil and gas constituting around 41 per cent of India's primary energy consumption, India is expected to be the third-largest energy consumer by the year 2020.
"To bridge this gap between supply and demand, we are encouraging domestic and global companies to explore our onshore and offshore regions. I take this opportunity to assure investors of our government's commitment to providing a stable and enabling policy environment for exploration of new sources of energy," Singh said.
India is also progressively pursuing other options to achieve energy security. One of these is the acquisition of energy assets in other countries. These will not only help in securing new supplies of energy but also in acquisition of the latest technological know-how, Singh said.
He cited the example of US shale gas revolution where technology and market-based pricing helped exploit the unconventional gas resource and turn the country energy surplus.
"This (technology and market based pricing) is a combination that is essential to provide rapidly growing economies like ours with energy solutions commensurate with our needs," the prime minister said.
India, which imports about 80 per cent of its oil and more than half of its natural gas, has market-based pricing for crude but sub-market rates for gas and for oil products except petrol.
A new gas pricing regimen is envisaged from 1 April 2014, which will nearly double rates to $8.2 to 8.4 per million British thermal unit though still lower than market price.