Market price for power on anvil

The Planning Commission today approved the draft integrated energy policy, which seeks to implement market-based pricing and bring about better coordination among ministries.

The draft policy proposes a common appellate tribunal for all energy sub-sectors like coal, power, etc, to resolve disputes, but there is no recommendation for a common regulator.

The commission, chaired by Prime Minister Manmohan Singh, will forward the new energy policy in a month to the Union Cabinet for approval.

“The prices should be market-determined because of the huge import dependence,” Planning Commission deputy-chairman Montek Singh Ahluwalia said today. “The prices should also take care of externalities like pollution.”

Asked whether the commission had proposed private participation in nuclear energy, Ahluwalia said there had been a discussion on the importance of nuclear energy, but no specific discussion on private investment in the sector. “This is not legally possible,” he said.

India, Asia’s third-largest economy, imports more than 70 per cent of its crude oil requirement and sells petroleum products like petrol, diesel and kerosene at below production cost, leading to a subsidy burden on the government and losses for state-owned oil marketing companies.

The report proposes to double the e-auction of coal to 20 per cent to discover the market price. At present, domestic coal supplied by public sector utilities is sold at a fraction of what it costs in the international market.

Referring to private power companies buying coal mines in countries like Indonesia to secure supplies for their thermal power plants, Ahluwalia said: “The new policy framework proposes that we should acquire more energy assets abroad.”

As for coordination among ministries, Singh said, “The need for an integrated approach to the energy policy has arisen because policies affecting energy are determined by multiple ministries like petroleum and natural gas, coal, power, atomic energy etc.” He added that the policies for different energy types had evolved historically and were not always consistent across sectors.

Speaking on regulation, he said there was a proposal to set up a common appellate tribunal for the entire sector and that the hurdles for private sector participation needed to be cleared.