NEW DELHI: The analysis of the energy sector in the Economic Survey offers little direction for the future. This is despite the 12th Five Year Plan having identified energy security as the critical component to make a growth rate of 9% per annum of GDP feasible.
It says the sector has failed to measure up to the economy’s demand this fiscal, despite improved power and crude oil availability from a year ago, prompting the government to even explore import of shale gas supplies from theUS. But while the survey paints a grim picture of the sector, it offers hardly any suggestions, only saying “one of the foremost challenges in the coming years is to meet the energy requirement”.
There is a slight improvement in crude oil production this fiscal to 38 million tonne from a year ago, mainly due to CairnIndia’s Rajasthan oil fields’ output. In the power sector, private sector capacity addition exceeded the target of 7,610 MW this fiscal.
The expected refinery capacity addition from the current 193.4 million tonne a year (mmtpa) to 214 mmtpa will give the country a strong place in the export market for refined petroleum products, while more investments into imported natural gas processing terminals would enhance supply of gas to the domestic industry in the near future.
But the contraction in natural gas output from Reliance Industries’ D6 field in the Krishna Godavari block, poor execution and cost over-runs of central power projects, shrinking coal production levels and ONGC Videsh’s lower hydrocarbon production due to geopolitical upheavals in Sudan and Syria crippled the energy sector this fiscal.
The overseas arm of ONGC produced 6.76 million tonne of oil equivalent (mmtoe) in the first three quarters, down from 7.06 mmtoe the same time a year ago. Despite the lower availability of domestic gas, the country has an ambitious target of supplying piped natural gas for cooking in 271 cities in the next 10 years.
The survey criticised the poor project identification, design, procurement and monitoring of central power projects leading to delays and cost over-runs. Among the 583 high-cost projects, about 45 power projects and 29 oil sector projects have been delayed. Therefore, the country could add only 52,000 MW in the five years ending March 31, 2012, way below the original target of 78,700 MW. The inefficient execution was augmented by difficulties in land acquisition, rehabilitation, environment-related issues, inter-state disputes and contractual issues, the survey said. However, power deficit declined from 9.6% in 2006-07 to 7.9% in the first nine months of this fiscal.
To meet the rising requirement of gas for power generation, the country has to rely more on import of liquefied natural gas. “Possibilities are being explored for availability of any diversion of gas available in theUSmarket on account of shale gas finds,” the survey said.