Republic of India is a Neighbour of China

• Most Populous Countries. It is No.2. China is No. 1.

• It has unique history of Political stability and a Socialistic Pattern of Government which has continued for 47 years.

• The Country was very poor when Independence came.

• Today it has Commendable Achievements in different fields.

It has several Overcome them. We mention here.

• GDP Low Rate of Growth

• Food Crisis

• Foreign Exchange Crisis

• Emerging Energy Crisis

GDP PriceASCI Presentation

Food CrisisASCI Presentation

Foreign ExchangeASCI Presentation

Energy Situation

• Major sources of Energy are:

• Coal – Growth Rate How it has achieved ?

• Oil – Growth Rate – How it has achieved?

• Gas Growth Rate – How it has achieved ?

• Electricity Growth Rate – How it has achieved ?

Public Sector Strategy

• Public Sector to begin with consolidating the small things into bigger ones.

• When Public Sector will established, allow local Private Sector to compete.

• Prices Regulations Gradually Removed.

• Current Problems – How it is proposed to be solved ?

Introducing Competition in Power Sector

• Open Access Allowed.

• All transmission lines operated by Central Government and State Governments.

• Any Consumer or Utility can use transmission facility of anyone else, subject to availability of capacity.

• He should pay a Wheeling Charge as fixed by concerned regulation.

• If the purchaser is not a utility, he should pay a surcharge equals marginal cost of procurement plus wheeling charge plus average T&D loss reduced from the tariff.

• Surcharge should be faced out _____ with the gross subsidy.

Policy Framework for the New Policy

• New capacity can be put up by central PSU, State PSUs, State utilities, private sector based power purchase agreement with the utility.

• Private sector units as merchant plants to supply bulk means.

Methodology and Principles of Tariff Determination are

specified by CERC for CPSUs• Government shall with the advice of

Regulatory Commissions specify the process of bidding.

• All procurement should be on the basis of bidding usually bidding item is cost of supply of power fixed cost plus variable cost. Variable cost is a pass through.

Why Open Access ?

• It will enhance supply auction and introduce competition will open up markets and will help purchaser to sell to consumers outside the distribution area.

• It will support trading market.

• Should lead to optimal resource exploitation.

Why Surcharge ?

• Normally Incharge should be allowed.• In India all utilities and the regulators charged the

HT industrial consumers much more than poorer consumers like Households, Agriculture, Cottage Industries etc.

• The element of excess is called Gross Subsidy.• This gross subsidy will have to be determined.

Coal Sector Modernization

• India Third largest producer of coal 400 mt/yr. China 1st – 2000 mt/yr. USA 2nd 100 mt/yr.

• Deposits are: 8.6 % of the world, China 12 %, USA 25 %.• Mining Coal began in India in 1774 for steam trains.

• On date independence around 50 mt/year from over 3000 mines, mostly private.

• 1971-73, all coal mines were nationalised and consolidated.

• From 1975, coal for railways got reduced to near zero today. But coal for power generation increased.

Modernization Efforts So far

Coal Sector 3/3

• Only two major public sector Coal India Limited (CIL) and Singareni Colliery Company Limited. (SCCL)

• Production in 2003-04 is around 400 tonnes

• Projected demand in 2029-30 in 1242 (Low Coal Scenario) 1812 (High Coal Scenario).

OIL SECTOR1/4

• In Pre-independence days oil was extracted very small quantities in Assam by British owned oil companies.

• In 1955, Oil & Natural Gas Commission was established by Legislative sanction.

• With mainly USSR assistance oil exploration was done on shore and off-shore.

Oil Sector 2/4

• In early Seventies, Bombay High off-shore discovery increased crude production to over 30 mt/yr.

• From 1990, India adopted a liberalised economic policy & private companies were given exploration and development leases under NELP.

• Production of oil has stagnated around 30 mt/yr.• Production of Gas has increased as shown in table.

Oil Sector 3/4

• Oil production were imported and marketed by private oil companies, Burma Shell, Caltex etc.

• Indian Oil Company was established in 1959, to import crude and refine it to products. This has expanded its capacity to about 55 million tonnes throughput

• Private oil companies were nationalized I 1976 but continued as separate companies to provide a competitive market.

Oil Sector 4/4

• Private agencies can establish refineries and the one fully private refinery is the largest single unit refinery with 20 million tonnes throughput.