IEC 2013 Securing tomorrow’s energy today: Policy & Regulations Session B: Long Term Energy Security February 2013

Demand Supply Scenario of Energy in India Total Primary Energy Consumption of Top five countries in mtoe India is currently placed fourth after China, US and Russia in terms of primary Energy consumption Energy Demand is increasing at a fast pace owing to increasing economic activity Demand outstripping supplies, thereby resulting in increasing energy deficit Country Primary Energy Consumption China 2210.3 United States 2205.9 Russian Federation 644.4 India 487.6 Japan 474.0 Source: BP Statistical Review 2012 Challenges faced by Indian Energy Sector Such in terms of Supplies Rising Imports for both hydrocarbons and coal Declining production from mature fields for hydrocarbon production Reducing interest of foreign players Stagnating production in coal Pressing Need for a well-integrated infrastructure for coal supply chain and lack of private investment

Integrated Energy Policy “We are energy secure when we can supply lifeline energy to all our citizens irrespective of their ability to pay for it as well as meet their effective demand for safe and convenient energy to satisfy their various needs at competitive prices, at all times and with a prescribed confidence level considering shocks and disruptions that can be reasonably expected.” Integrated Energy Policy, Government of India Energy Security, as defined by the Integrated Energy Policy of India, encompasses three critical dimensions: Meeting India’s large energy demand to sustain an annual economic growth rate of 8 to 9 percent through 2031-32, Meeting lifeline energy needs of all citizens to address social development, health and safety of the energy poor, and Ensuring sustainability in energy supply and use. In the current context energy security also encompasses a critical consideration of energy efficiency across all aspects related to energy security. Energy Security thus entails a complex set of coordinated initiatives to align in making specific choices for the country in charting a low-carbon and energy-secure growth path for the country.

Policy / Regulatory Challenges Faced By the Energy Sector Some of the challenges faced by Indian Energy Sector due to regulatory challenges are as follows: Reduced interest of international players in recent NELP bidding rounds CAG allegations on the non-transparent manner of coal block allocations, a number of coal blocks have recently been de-allocated Declining domestic coal production Stalled CGD bidding rounds Health of distribution utilities in India Rising Under-recoveries of OMCs Limited participation of private players in fuel retailing Delays in completion of projects due to clearances and especially Hydro projects Controlled Energy pricing resulting in inefficiencies in the consuming sectors Due to policy and regulatory challenges, India may lose on foreign investment, especially in areas like deep/ ultra deep water E&P, underground mining, Shale gas, CGD, fuel retailing, etc.

Evolving Geo-political Environment and Challenges faced by India Dependence on MENA Region for Hydrocarbons (Proven Reserves) Evolving Geo-political scenario and Energy Security The Arab Spring; vulnerability of supplies- stability of government/ affect on prices (India imports ~ 60% of its crude from the region) Gas supplies and prices in post Fukushima scenario Shale Gas revolution in the US and changing trade flows Challenges Faced by India in Context of Geo-Political Environment In the past, India has lost out for assets to China in countries such as Khazkhistan, Nigeria, Angola, Russia, etc. Long pending pipeline deals; Lost Myanmar pipeline to China U.S., rules are not favorable for exporting gas to non-FTA countries Coal supplies and experience in Indonesia Pressure on India to reduce imports from Iran Securing technology and fuel supplies for Nuclear Energy

Key Discussion Points Is there a need for revisiting Integrated Energy Plan in view of changing Energy Dynamics within India and Globally? Key points towards Synergizing a Secured Energy Future Of The Country Incentivizing investment in Hydrocarbon sector: Rangarajan committee report Energy Resource Allocation: Transparent & attractive competitive bidding framework for allocation of coal, hydrocarbon, unconventional energy, hydro, etc. Energy Pricing: Market driven pricing and accessibility of energy for poor Securing assets/ long term contracts outside India: Role of Government and Energy Diplomacy Role of regulator: Level Playing field to all players, Level of intervention Technology gaps: underground coal mining, deep water/ ultra deep water hydrocarbon drilling, horizontal drilling, hydrofracking and nuclear related technologies Energy Mix: Diversification of Energy Sources and overdependence on any one fuel Supplier Diversity: Limited reliance on one supplier/ region/ country Clearances and Licenses: Land Acquisition and R&R Infrastructure related to coal, gas

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