New Integrated Energy Policy

Presentation for IEC : 2015 28th January 2015

Why a new Policy?

Move away from getting into sectoral issues

First Fix Inter Sectoral Issues and Principles

Principles first, numbers later

Objectives

Evolve Principles which will apply to all Energy Sectors

Deviations to be the exception; where unavoidable they will have to be specifically proposed, justified and approved

Principles

Resource Assessment Role of Private Sector Single Regulator Pricing supply side and demand

side Taxation

RESOURCE ASSESSMENT Recoverable Reserve estimation not available in

public domain Quantum of Recoverable Coal Reserves

doubtful Need periodic correction for economic and

environmental reasons Current reserve estimation not useful for

planning or deciding linkages

ROLE OF PRIVATE SECTOR

The roles vary considerably across energy sectors

Mode of selection also varies ideally all sectors should use competitive bidding

Terms of operation should also be similar merchant sale is allowed in oil and gas sector but in coal it is restricted to captive use

Revenue share vs cost recovery is another common issue

SINGLE REGULATOR Ideally there should be one regulator for all

energy sectors many countries use this model Till this happens the role of the regulator

should be uniform across sectors Power sector regulation is most advanced with

coal the most behind Not rational to trust regulator in one sector

but not in another

PRICING SUPPLY SIDE AND DEMAND SIDE

Of all the issues this is the most difficult and also important. Pricing Policy has to take note of the fact that our import

dependence is rising and with it our exposure to external price developments

Supply side consumer price should be linked to import parity prices while production prices should be close to cost of production

Imperative that all suppliers of energy goods and services get fully compensated by prices/subsidies

TAXATION Uniform treatment for all in Direct Taxation Accelerated Depreciation is not a good incentive

however if given in one area it should be given to all Indirect Taxation should be used to tax inefficient and

large vehicles/farm equipment Likewise Tax on efficient appliances should be minimised

if not made zero.

SUBSIDIES Subsidies should be open and not hidden in terms of tax

concessions Subsidies should be linked to performance and not

capital investment On consumer side subsidies should be given as direct

cash transfer and not bundled with goods this never has the intended benefit

New Integrated Energy PolicyWhy a new Policy?ObjectivesPrinciplesRESOURCE ASSESSMENTROLE OF PRIVATE SECTORSINGLE REGULATORPRICING SUPPLY SIDE AND DEMAND SIDETAXATIONSUBSIDIES