A brief review of the current energy situation in India and a short note on the lack of vision for energy sustainability in times of aggressive global energy politics.

India is the world's sixth largest energy consumer. The total energy consumption (in 2002) of 14.0 quadrillion Btu accounted for 3.4% of world total energy consumption. The per capita energy consumption was 13.3 million Btu (vs U.S. value of 339.1 million Btu). The sources of energy are traditional - oil, coal, natural gas and they account for 34.7%, 54.5% and 6.5% of the energy respectively.

Oil accounts for about 30% of India's total energy consumption. Most of India's oil reserves are located in the Mumbai High, Upper Assam, Cambay, Krishna-Godavari, and Cauvery basins. However, these oil fields do not produce nearly enough oil to match domestic supply - nearly 64% of its oil is imported (1.4 million barrels per day in 2003). Future oil consumption is expected to grow rapidly, to 2.8 million bbl/d by 2010, from 2.2 million bbl/d in 2003. The government is attempting to limit its dependence on these imports by expanding domestic exploration and production, and has invited direct foreign investment in this sector.

During the early 1990s, India imported a large quantity of refined products. This was primarily due to lack of domestic refining capacity. In 1999, however, completion of Reliance Petroleum's Jamnagar refinery along with other smaller refineries has allowed India to close the gap. At the end of 2003, India had a total of 2.1 million bbl/d in refining capacity.

Regulation of petroleum products pricing was officially ended in April 2002, with the end of “Administered Pricing Mechanism”. Prior to this deregulation, the Indian government had tried to offset the effects of price changes in crude oil by maintaining an Oil Pool Account, which acted as a buffer. In practice, though, petroleum product prices are not completely deregulated – subsidies have been maintained on some products, such as kerosene, which is commonly used as a cooking fuel by low-income households in India.

Indian consumption of natural gas has risen faster than any other fuel in recent years. From only 0.6 trillion cubic feet (Tcf) per year in 1995, natural gas use was nearly 0.9 Tcf in 2002 (as much as what was produced) and is projected to reach 1.2 Tcf in 2010 and 1.6 Tcf in 2015. Reliance Industries has discovered a large amount of natural gas in the Krishna-Godavari Basin offshore from Andhra Pradesh as well as a smaller field offshore from Orissa. Cairn Energy also reported natural gas finds offshore from Andhra Pradesh as well as Gujarat. Despite these new reserves, India's domestic natural gas supply is not expected to keep pace with demand, and India will have to import much of its natural gas in the future.

Coal is the dominant commercial fuel in India, satisfying more than half of India's energy demand. Domestic supply satisfies most of India's coal requirements owing to the fact that, India is the world's third largest coal producer (after China and the United States). Power generation accounts for about 70% of India's coal consumption, followed by heavy industry. Indian coal is generally high in ash content and is of low calorific value and so most of the coking coal is imported. Coal consumption is projected in the International Energy Annual 2004 to increase to 430 million short tons (Mmst) in 2010, up from 359 million short tons (Mmst) in 2000. Major Indian coal fields are found in Bihar, West Bengal, and Madhya Pradesh. There has been effort to privatize the coal industry in the past, but the current government has called off plans for further coal-sector liberalization in the face of strong opposition from labor unions.

India has an installed electric power generation capacity of 120 gigawatts (GW). While most of this capacity is thermal (90 GW), hydro (26 GW) and nuckear (3 GW) are also present. Nevertheless, this capacity is well below the peak demand. Although about 80% of the population has access to electricity, power outages are common. The government had targeted capacity increases totaling 100 GW over the next ten years.

These numbers raise numerous questions and very few answers.

Given the world politics around energy, what are India’s long term energy plans? How does the government plan to manage consumption of non-renewable energy in light of supply conditions? And what are its plans vis-à-vis alternative energy?

Even though the Government of India’s line is that it wants to reduce foreign dependency, its actions do not support that claim. The results from these domestic oil explorations have not resulted in significantly feasible choices. Given that there will be an increased consumption in energy – as the government plans project – and India has little in increased domestic sources, it only implies that India will have increased dependence on foreign energy, not less.

Our foreign exchange reserves are closely tied to oil prices and we have already seen how sudden changes in prices can affect India’s domestic and international economic stability, even forcing it to its knees vis-à-vis the international financial institutions. All of these point to aggressive plans for greater energy dependency.

This can be achieved in two ways – either through increased planning on reduction of consumption or greater efforts in alternative energy or both. Unfortunately, neither is happening.

- A Review by Manish Jain