ENERGY
INTRODUCTION 6.1 Energy is an essential input for economic development and for improving the quality of life. India's per capita consumption of commercial energy (viz., coal, petroleum and electricity) is only one- eight of the world average and will increase with the growth in GDP and improvement in the standard of living of the people. The energy strategy has to plant not only for an increase in indigenous availability of energy but also its better utilisation because the trends in India's commercial energy consumption show high rates of growth relative to GDP growth and the growing share of oil. The annual growth rates of commercial energy consumption in certain sub- periods were as follows:
1953-54 to 1970-71 7.2
1970-71 to 1979-80 4.7
1979-80 to 1984-85 5.9
6.2 There was a fall in the rate of growth after the first oil crisis but not after the second one. With regard to the mix between different types of commercial energy, the Working Group on Energy Policy had suggested in 1979 that the mix in 1982-83 should be 24.9 per cent of coal, 42.1 per cent oil and 33 per cent electricity. In fact the shares for the same year were 21.6 per cent for coal, 49 per cent for oil and 29.4 per cent for electricity. The dependence on oil appears to have increased in the last three years of the Sixth Plan. Though the international oil situation is comfortable now and may continue to be so for several years, it could become adverse with declining production from non-OPEC oil-producing countries. Since we are unlikely to be self-sufficient in oil in the near future, an intolerable burden by way of cost of oil imports will be cast on the economy should oil prices again rise as they did in the seventies and early eighties.
6.3 The sectoral pattern of consumption of commercial energy is given in Table 6.1.
6.4 The data bring out the rapid rise in the share of agriculture in commercial energy consumption during the sixties and seventies and the dominant role of industrial consumers in electricity and coal and of the transport and household sectors in oil consumption. A major policy objective is to increase the use of coal in households and of electricity in the transport sector in order to reduce their dependence on oil.
6.5 Commercial energy accounts for a little over half of the total enery used in the the country, the rest coming from non- commercial resources like cowdung fuelwood and agricultural waste. Though the share of these noncommercial sources has been coming down, in absolute terms, consumption has increased from around 126 million tonnes of coal replacement (MTCR) in 1953 to 250 MTCR in 1980. These renewable, non-commercial sources have been used extensively for hundreds of years but in a primitive and inefficient way. The indiscriminate use of non-commercial energy sources is leading
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to an energy crisis in the rural areas. This needs to be tackled with a sense of urgency. We must also bring about the development and accelerated utilisation of renewable energy sources (both in the rural and urban areas) wherever these are found to be technically feasible and ecnomically viable. The Seventh Plan reflects this directional emphasis.
Energy Resources 6.6 Coal and lignite: The present assessment of available resources of coal is given in Table 6.2.
TABLE 6.2
Resources of Coal
(Million tonnes)
Seam Characteristics Proved Indicated inferred Total
1. Thickness 0.5m or more depth upto 1200m 34,413 58,996 55,382 148,791
2. Thickness 1.2m or more depth upto 600m 35,826 42,557 28,474 106,857
Source: Row 1: Geological Survey of India estimates, September,1984. Row 2: Bureau of Industrial Costs & Prices.
6.7 There has been a substantial increase in coal resources since the start of the Sixth Plan, accounted for largely by two fields of the Mahanadi Valley, namely, Talcher and lb river.
6.8 About 90 per cent of total lignite reserves in the country are at Neyveli in South Arcot district of Tamil Nandu. The total reserves are placed at 3,300 million tonnes of which 1,900 million tonnes are in the proved category. The other lignite-bearing States are Gujarat, Rajasthan and Jammu and Kashmir where reserves of the order of 565 million tonnes have been indicated or inferred.
6.9 Though India ranks fifth in the production of coal in the world, it has reserves of 201 tonnes of coal per person as compared to 13,747 tonnes in the USA, 23,112 tonnes in USSR and 1060 tonnes in China. The known reserves of coal in India constitute only 0.8 per cent of the total world coal resources. While the total estimated resources of coal in India are 1,48,791 million tonnes the mineable reserves may amount to about 60,000 million tonnes. Based on the demand projections upto the turn of the century and assuming an annual growth of 4 per cent in coal consumption thereafter these resources would be sufficient for about 130 years. The position for metallurgical coal is not satisfactory and the probable life expectancy is around 70 to 80 years only.
6.10 Hydro electric: The Central Electricity Authority has recently completed a systematic reassessment of hydroelectric resources of the country. The estimated annual energy potential is placed at 472.15 Twh (billion Kwh units) (89,830 MW at 60 per cent load factor). Of this potential, 49.67 Twh has already been developed and 26.96 Twh is under development. More than 80 per cent of the hydro potential still remains unharnessed despite the inherent advantages of hydro-electric power plants over thermal and nuclear plants. However, many such terrains may not be available from larger environmental and geological considerations and a realistic picture of hydro potential is necessary.
6.11 Oil and Gas: As on 1-1-1980 the balance of net recoverable reserves of oil (gross reserves less production) were placed at about 360 million tonnes and gas (free and associated) at about 352 billion cu. meters. As a result of intensification in exploratory efforts and reassessment of reserves of various fields, the balance of net recoverable reserves of oil has increased to 511 million tonnes as on 1-1-1984. Similarly in case of gas (free and associated), the balance of net recoverable reserves has increased to 478 billion cu. meters. Almost 67 per cent of the increase in gas is on account of free gas discoveries in the west coast offshore.
6.12 The prognosticated geological resources of hydrocarbons are estimated at about 17 billion tonnes of which 63 per cent are expected to be offshore and 37 per cent onland. Out of this, the geological reserves established are only 4 billion tonnes. Further, half of the prognosticated resources are estimated to be in the form of natural gas of which only 10 per cent have been established. Accordingly future planning has to take into account the possibility of significant finds in gas reserves. A policy plan for utilisation of the gas reserves has to be evolved in advance.
6.13 In 1983 our proved reserves of oil represented only 0.5 per cent of the world oil proved reserves. As regards gas, the proportion of India's reserves to the world gas reserves was also 0.5 per cent. At the current rates of consumption, oil can last about 15-20 years.
6.14 Uranium: The uranium resources in the country are estimated to be about 70,000 tonnes, the thermal reactor equivalent of about 1,900 million tonnes of coal. This resource alone will be equivalent to 120 billion tonnes of coal if used in breeder reactors. The long range
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potential of nuclear energy in India depends on thorium whose reserves exceed 3,60,000 tonnes. When used in breeder reactors, this resource would be equivalent to 600 billion tonnes of coal which is about five times the coal reserves of India. Thus thorium can be viewed as the single most important energy resource in the long term.
Renewable Engergy Resources 6.15 Fuel wood: India has a total forest area of about 75 million hectares which forms about 22.8 per cent of the total geographical area. The total availability of fuel wood according to the Report of the Fuel Wood Committee (1982) is at present about 50 million tonnes, which the Committee has estimated would only meet less than half of the actual requirements. Thus the Committee has concluded that if the present trend continues, the fuel wood for cooking will become the greater constraint than the availability of food itself.
6.16 Agricultural wastes: The availability of agricultural wastes depends on the extent of area and production of different crops. Very few reliable studies on agricultural waste estimates are presently available. Based on the available estimates and considering the fact that there are several competing uses for agricultural wastes like feed and fodder, roofing material and organic matter for compost- making, the consumption of agricultural wastes for fuel purpose in 1975-76 was estimated to be around 41 million tonnes.
6.17 Animal dung: Animal dung forms 15 per cent of the total energy consumption in the rural sector. Out of total estimated production of 324 million tonnes of animal dung (air-dry), about 73 million tonnes have been estimated to be burnt for energy purposes which is more than the total fertiliser consumed in agricultural production in India. If this animal dung was used as fertiliser, food production could have been augmented substantially.
6.18 Others: Solar energy potential is almost unlimited in tropical countries like ours. However, a major constraint in harnessing this source of energy is the high costs of existing technologies. These costs have to be brought down through intensive and applied R&D. Wind energy is available in abundance, especially in coastal areas and in hilly regions, but cost effective technologies have to be developed to harness this energy.
Energy Conservation 6.19 According to the Report of an Inter-Ministerial Working Group on utilisation and conservation of energy, there is a conservation potential of 25 per cent in the industrial sector. In the transport and agricultural sectors the conservation potential is 20 per cent and 30 per cent respectively. The report has further quantified conservation potential that could be achieved by short- term, medium term and long term measures and the investments necessary by the industry to achieve this potential. So far, we have not been able to make significant progress in energy conservation.
6.20 Preliminary estimates indicate that the oil intensity of Indian economy has been increasing, contrary to world trend. The potential oil savings are 1.0 million tonne in the industrial sector, 2.4 million tonnes in the transport sector and 0.5 million tonne in the agricultural sector.
6.21 Eighty per cent of electricity is consumed in energy- intensive industries, such as aluminium, iron and steel, textiles, chemicals, fertilisers, cement, paper and collieries. The consumption of electricity per unit of product in the above industries is much higher than that in developed countries. Part of it reflects the vintage of the production process. However, savings are possible to the extent of 5250 MW in the industrial sector and 1870 MW in the agricultural sector. In the latter, 80 per cent of the pumpsets work at efficiency of 30 per cent or lower. With a little investment their efficiency can be increased by about 15 per cent to 20 per cent. Transmission and distribution losses are about 21 per cent whereas these are of the order of 6 per cent to 12 per cent in the developed countries. If the losses can be reduced by 5 per cent, this will amount to saving in additional capacity of about 1500 MW. There is also room for reduction in the auxiliary consumption in the thermal power stations.
6.22 It is estimated that about 8 million tonnes of coal are wasted in India every year through wrong practices in storage, handling, preparation and combustion of coal. Little attention has been paid to these aspects so far.
6.23 A decision has been taken recently by the Government to set up an Energy Conservation Fund. The proceeds of this fund would be utilised for carrying out conservation measures through studies, training, education and providing assistance in the implementation of different schemes. Strong administrative structures will also be created for expediting decisions.
6.24 A beginning in instituting energy audit in the units consuming considerable quantities of energy will be made. If required, targets will be fixed for achieving efficiency standards on a time-bound basis and incentives provided for units which meet these standards.
Productivity 6.25 Oil: It can be said that in the oil sector, productivity levels are generally satisfactory. However, there is still scope for improving the utilisation of the onland and offshore drilling rigs. With the use of computers, considerable increase in productivity of such equipment has been achieved in other countries. Adoption of the systems approach could perhaps result in economising the use of support equipments for rigs. Inventory controls need to be
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streamlined. The working of the workshops should be on commercial lines. The quality of wells drilled needs to be improved. Use of micro-processor-based systems can optimise refinery operations. Fuel and loss, constituting the largest of the elements that make up refinery operating costs, should be reduced. In the absence of any domestic competition, the industry should constantly measure its performance with that of international oil firms.
6.26 Coal: In the coal sector, despite the adoption of costly equipment of international standards for open-cast mining, the output per man shift (OMS) is consideably below the international levels. Even between the coal companies, there is considerable variation. The OMS of the underground mines has been virtually stagnant. The equipment utilisation factor leaves much scope for improvement. The quality of the feasibility reports needs to be improved without which there can be costly failures in project implementation.
6.27 Power: As regards the power sector, poor capacity utilisation of the thermal plants vitiates the working of most utilities. There are also time and cost over-runs in implementing projects. The stabilisation period tends to get elongated when Stations are handled by inadequately trained personnel. The transmission and distribution facilities have not increased to the extent of additions to the installed capacities. Excessive manpower, swollen inventories, high oil and coal consumption and heavy arrears are indicative of poor management practices in the State Electricity Boards.
6.28 In conclusion, one of the key elements of the energy strategy is to increase the productive efficiency of capacities already created and of the equipment used.
Public Awareness 6.29 As yet people are not sufficiently aware of the energy situation in the country. No energy startegy can be successfully implemented without better understanding of the energy situation among the public. Consciousness can also be increased through the publication of analytical work and through the promotion of wide- ranging public debates.
Equitable Distribution 6.30 Urban areas use around 80 per cent of commercial energy though their share in population is about 24 per cent. Though 64 per cent of villages are electrified, only around 8 per cent of rural households are using electricity. Rural areas suffer from poor availability of commercial sources as also inefficiency in the use of non-commercial sources. In order to correct this, micro-level or decentralised energy planning is necessary. This is being attempted in the Integrated Rural Energy Programmes (IREP) which was pilot tested in the Sixth Plan and is now being extended to all States and UTs. Details of this programme are given in the chapter on Rural Development.
Energy Pricing 6.31 The Sixth Plan had emphasised the need to give high priority to the evolution of a structure of energy prices which reflect true costs, curb excessive engergy use and promote conservation of scarce fuels. Except in the case of oil, timely adjustments have not been made in the prices of coal and electricity to reflect the real costs. Energy pricing has not promoted, to the desired extent, inter-fuel substitution. Energy users have generally not adopted conservation measures already identified. While action is being taken to promote technologically energy-efficient equipment and processes, on the one hand, appropriate energy pricing policy would have to be followed, on the other hand, in order to induce economies in the use of energy in all sectors and encourage desired froms of inter-fuel substitution, including renewable energy wherever viable. The pricing of energy should not only reflect the true costs to the economy but also help to ensure the financial viability of the energy industries. This is particularly relevant in respect of coal and power industry. As we have said in the past, it is wrong to think that an adjustment in the prices of a basic input like energy would aggravate the inflationary situation; the costs to the economy are not reduced by not reflecting them in proper pricing. Indeed the continuance of wrong pricing policy has a far more deleterious effect on the health of the economy than is often realised. The formulation of an integrated energy pricing structure on the above lines should receive the highest priority in the beginning of the Plan period.
Strategy 6.32 In the light of the above, the existing energy strategy needs to be modified for the Seventh Plan with the following main elements:
(i) accelerated exploitation of coal, hydro and nuclear power;
(ii) intensification of exploration for oil and gas, and exploitation of oil with regard to the available recoverable reserves and reasonable expectations of adding to them in the foreseeable future;
(iii) advance policy planning for the large emerging gas potential;
(iv) management of oil demand including formulation of a national transport fuel policy;
(v) energy conservation including inter-fuel substitu- tion;
(vi) increasing the productive efficiency of capacities already created and of equipment used;
(vii) exploitation of renewable sources of energy like energy forestry, bio-gas, biomass, wind, solar energy, etc. especially to meet the energy requirements of rural communities;
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(viii) intensification of research and development in all energy resources and in particular, in emerging energy technologies; (ix) design and implementation of area-based integrated rural energy programmes; and (x) wide public explanation, discussion and acceptance of energy strategy to ensure its successful implementation.
6.33 In the subsequent paragraphs, the plan policies and programmes of oil, coal, power and new renewable sources are discussed.
OIL AND GAS 6.34 Domestic production of crude oil and natural gas increased nearly threefold during the Sixth Plan, as shown in Table 6.3.
TABLE 6.3
Oil and Gas Production in the Sixth Plan
1979-80 1984-85
A. Oil (million tonnes)
1. Offshore 4.42 20.14
2. Onshore 7.35 8.85
Total 11.77 28.99
B. Gas (billion cu.metres)
1. Offshore 0.54 4.40
2. Onshore 2.22 2.83
Total 2.76 7.23