Can't ignore economic and strategic implications

The recent changes in global oil prices and the government?s plans to go ahead with dismantling of the Administered Pricing Mechanism merit focussed attention on our strategies for management of the hydrocarbon industry in India and plans for ensuring security of energy supply. There are barely 4 ? months left for putting in place all the measures required for successful and smooth removal of the APM. It appears that much remains to be done. Firstly, it is essential to bring a regulator in place for the downstream hydrocarbons industry and natural gas sector, preferably under one single functionary. There is no such need in the upstream end of the sector, because there is already a Director-General of Hydrocarbons. It is important for the regulator and the regulatory function to be established, because this would create confidence in the industry, if the person is put in place immediately and his terms of reference and methodology of operation clearly announced. It is reasonable to accept that the office of the regulator would take a few months to really become effective, and the last thing that this country should see is a vacuum developing once the APM is dismantled and the government withdraws its powers to set prices of petroleum products and natural gas. Several objectives should define the functioning of the regulator, including the sharing of common facilities such as pipelines and of course the essentiality of providing regular and adequate supplies of petroleum products to remote locations in the country, so that no section of society is excluded from the distribution network. The dismantling of the APM is a significant challenge, but this should not obscure the greater need to develop a proper strategy for management of energy resources in general and hydrocarbons in particular for the country as a whole. The Hydrocarbon Vision 2025 developed by this government as part of the prime minister?s initiative was a useful exercise but, for it to be effective, it requires to be revisited on a regular basis. Volatility in oil market prices has come back and is likely to stay with us for several years in the future. With mounting imports of oil, India is particularly vulnerable to economic shocks from sudden oil price increases, which can be expected at various times in the future. A good part of our dependence on mounting petroleum imports arises from failures in other sectors of the economy. It is estimated that between 20 ? 25,000 megawatts of captive power capacity exists in the country today. This is the direct result of inadequate and unreliable power supply, a situation which continues to worsen progressively. Similarly, the rapid increase in demand for transport fuels is the direct result of inadequate public transport and the failure of the Indian Railways to meet the expected demand for both freight and passenger traffic. The result is that private transport throughout the country has been increasing its share while there has been a corresponding decline in public transport. Over the past four decades a shift in relative shares has taken place from rail to road transport. Even more serious is the slow movement to energy efficient technologies in every sector of the economy. A clear technology vision and a policy framework to promote its realisation can not only improve the efficiency of energy use but also lead us towards greater use of renewable energy technologies with economic and environmental benefits. For several years now the country has lacked an effective and integrated energy policy. Even if such a policy was developed and announced, it would really be of no consequence unless it is constantly reviewed and its implementation monitored and assessed regularly. There is unfortunately no single point within the government that is charged with such a responsibility and, therefore, we see our dependence on oil imports continuing to increase while we remain helpless witnesses to a complete lack of direction on the policy front in the energy sector. We cannot continue to ignore the economic and strategic implications of a clear, coherent and integrated energy policy. Even at this stage one may hope that wisdom will finally dawn on us in this area of crucial national interest.