INFRASTRUCTURE
SECTION - 1
ENERGY 6.1 The production targets for primary com- mercial energy sources (i.e. crude oil, natural gas, lignite, hydro and nuclear power) in the terminal year of the Eighth Plan were fixed keeping in view the consumption requirements of the various sectors of the economy. The indigenous production of primary commercial energy was envisaged to increase from 161.37 million tonnes of oil equivalent (Mtoe)* in 1991-92 to 227.38 Mtoe in 1996-97 at an im- plicit rate of growth of 7.1% per annum com- pound. An import of 34.59 Mtoe was also estimated to be made in 1996-97 in order to meet fully the final energy consumption re- quirements of the economy; oil and oil prod- ucts constituting the major share of the primary energy imports. The total requirement of pri- mary commercial energy was thus projected at 260.34 Mtoe in 1996-97.
6.2 The rate of growth in total primary com- mercial energy requirement works out to 6,67% per annum implying an energy/GDP elasticity of 1,1914 in the Eighth Plan.
Trends in Primary Commercial Energy
Supply 6.3 The trends in the primary commercial en- ergy supply during the first three years of the Plan are given in Table 6. 1.
6.4 It can thus be seen that the indigenous primary energy supply reached a level of 175.12 Mtoe in 1994-95 registering an annual growth rate of 2.76% during the first three years of the 8th Plan as against the estimated annual growth rate of 7.1% during the five year period. The shortfall has mainly occurred in the hydrocarbon sector, necessitating larger imports of crude oil and petroleum products compared to what were originally planned. The total primary energy availability in 1994- 95 was 219.23 MTOE, registering an annual average growth rate of 5.16% during the first three years of the 8th Plan as against the antici- pated annual growth rate of 6.67% for the Plan period as a whole.
Requirements of Primary Commercial
Energy
(i) Petroleum 6.5.1 As regards demand for gross primary energy, the growth rate for refined petroleum products has been 4.1% in the first three years of the Plan as against the anticipated annual growth rate of 7.34% during five year Plan period. Based on the studies recently carried out by the Oil Coordination Committee, the demand for petroleum products has now been estimated to be 74.33 million tonnes in 1996- 97 as compared to the Plan target of 81.19 million tonnes.
6.5.2 The indigenous production of petroleum products from oil refineries is estimated to be 55.70 million tonnes from a crude throughput of 59 million tonnes. The LPG production from natural gas is now assessed at 1.75 mil- lion tonnes in 1996-97. The indigenous pro- duction of petroleum products is thus likely to be 4.12 million tonnes less than the Plan target and the availability of petroleum products from domestic production is estimated to be 57.45 million tonnes in 1996-97. In order to meet the domestic demand of 74.33 million tonnes in the terminal year of the Plan, the balance 16.88 million tonnes will thus need to be imported.
* MTOE is derived by calorific correspondence of different forms of energy vis-a-vis crude oil A standard tonne of crude oil is assumed to have a calorific content of 10 million kilocalories. On this basis, 1 MTOE = 2.27 million tonnes of coal. 4.2 million tonnes of lignite, 1.07 billion cubic meters of natural gas, 11.6 billion kilowatt hours of hydro power etc.
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Table 6.1- Trends in Supply of Primary Commercial Energy
(MTOE)
1991-92 1992-93 1993-94 1994-95
(P) (P) (P)
Indigenous Production
Coal & Lignite 105.35 109.36 112.21 115.38
Crude oil 31.17 27.68 27.76 33.40
Natural gas 17.15 16.61 16.86 17.78
Hydro power 6.26 6.01 6.05 7.10
Nuclear power 1.44 1.76 1.40 1.46
Total 161.37 161.42 164.28 175.12
Net Imports 35.88 42.84 43.79 41.73
Stock Changes (-)4.78 (-)4.59 0.08 3.83
Intl. Bunkers (-)0.12 (-)0.12 (-)0.12 (-)0.12
N. Gas Flared (-)3.86 (-)1.79 (-)1.46 (-)1.33
Total Primary Commercial Energy Availability
188.49 197.76 206.57 219.23
P - Provisional Estimates
6.5.3 The crude throughput in the domestic refineries may be of the order of 59 million tonnes in 1996-97. Keeping in view the indige- nous production of 38.465 million tonnes of crude oil likely to materialise in the terminal year of the Eighth Plan, an import requirement of 20.535 million tonnes will arise in that year which is 7.215 million tonnes more than the Plan target.
6.5.4 The total import requirement of crude oil and refined petroleum products thus comes to 38.75 MTOE on the basis of the current assess- ment of demand.
(ii) Coal 6.6 As regards coal, the annual growth rate in consumption has been 4.3% during 1992-95 as against the growth rate of 6.3 % anticipated during the 8th Plan period. As regards the coming years, there is likely to be a higher demand for thermal power generation in view of the increased PLF. The demand for other consuming sectors like transport and small industries (including brick kilns), however, is unlikely to materialise as per the Plan targets. The additional requirement of coal for power generation compensates the reduced demand from other sectors. The production of coal is likely to be 300 million tonnes in 1996-97 as against the Plan target of 308 million tonnes.
However, the consumption requirement re- mains at 311 million tonnes in the terminal year of the Plan. The target for imports of superior quality coal was initially kept at 3 million tonnes in 1996-97. This has now been revised to 6 million tonnes, thereby increasing the import requirement by 2.1 Mtoe.
(iii) Electricity 6.7.1 As regards electricity sector, the gener- ation target in the utilities was kept at 418.21 billion units in 1996-97. Correspondingly, a capacity addition target of 30,538 MW was envisaged. A capacity addition of 12,647 MW has been realised in the first three years of the Plan. The gross generation level achieved by the utilities during 1994-95 was 351.02 billion units. If the same trends in the growth in gen- eration continue in the remaining period of the Plan, the utilities may generate about 404 bil- lion units of electricity in the terminal year of the Plan. The target set for generation from the non-utilities is likely to be exceeded. In view of this, the demand-supply balance for elec- tricity is likely to undergo change as given in Table 6.2.
6.7.2 It is assumed here that the auxiliary losses and the transmission and distribution losses are 7% and 21% respectively in 1996- 97.
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Table 6.2
Revised Electricity Demand-Supply Balance (Bkwh)
1991-92 1996-97
Sector of As per Actual As per Revised
Consumption 8th Plan 8th Plan Estimates
Industry 112.60 110.60 155.00 149.62
Domestic 34.12 35.85 65.46 64.70
Agriculture 53.48 58.56 76.00 81.50
Others 26.14 25.96 39.38 38.78
TOTAL 226.34 230.97 335.84 334.60
Eletricity Supply
Utilities
1. Generation 286.71 287.03 418.21 404.00
2. Aux. Losses 22.51 21.01 29.27 28.28
3. Net Import 1.43 1.45 2.00 2.00
4. T&D Losses 61.09 61.44 82.10 79.74
5. Supply from Utilities (1-2+3-4)
204.54 205.03 308.84 297.98
Non-Utilities
6. Generation 24.50 28.60 30.00 42.00
7. Aux. Losses 2.70 3.66 3.00 5.38
8. Supply from Non-Utilities (6-7)
21.80 24.94 27.00 36.62
9. Total Supply (1+3+6)
312.64 315.63 450.21 448.00
6.7.3 The total import requirements of primary commercial energy thus work out to 44.54 Mtoe (including 0.17 Mtoe or 2 billion kwh of electricity from Bhutan) in the terminal year of the Eighth Plan. In view of the total primary energy imports thus estimated, the total pri- mary commercial energy requirements add up to 249.96 Mtoe in 1996-97 as compared to 260.34 Mtoe given in Para 1 above. If the GDP growth remains at 5.6% per annum, the pri- mary commercial energy/GDP elasticity is es- timated to be 1.037 for the Plan period. The position is summarised in Table 6.3.
Primary Commercial Energy Require-
ment in 1996-97 6.8 In view of the above, the revised primary commercial energy balance for 1996-97 vis-a- vis the target set for the Eighth Plan is given in Table 6.4.
Final Commercial Energy Consumption 6.9 The final commercial energy consumption was projected to rise to 172.65 Mtoe in the terminal year of the Eighth Plan. In view of the revised demand estimates the final commer- cial energy requirement now work's out to be 163.23 Mtoe in 1996-97. If the economy grows at 5.6% per annum as targeted in the Plan, the final commercial energy consump- tion-GDP elasticity is likely to come down from the earlier anticipated figure of 1.2006 to 0.988 for the Eighth Plan period. Table 6.5 below gives the fuelwise requirement of final commercial energy consumption in 1991-92 and 1996-97.
6.10 As may be seen, the revised estimates for final commercial energy consumption are lower in case of coal and petroleum products and higher in the case of natural gas and elec- tricity. As far as coal is concerned, the direct consumption requirements have come down in
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Table 6.3
Production, Consumption and Import Requirement of Commercial Energy in 1996-97
As per As per Additional
Eighth Plan Mid-term Rev Imports
COAL
- Production MMT 308 300
- Consumption " 311 311
- Imports " 3 6 3
LIGNITE "
- Production " 23 23
CRUDE OIL
- Production " 50 38.465
- Consumption " 63.32 59
- Imports " 13.32 20.535 7.215
PETROLEUM PRODUCTS
- Production " 61.57 55.7+1.75 MMT of LPG
(incl. 2.05 MMT of from Nat. Gas.
LPG from Natural Gas)
- Net Imports 19.62 16.88 -2.74
- Consumption 81.19 74.33
NATURAL GAS
- Production MCM 30,189 25,710
ELECTRICITY
- Capacity Add. MW 30,538 20,730
- Generation
- Utilities BU 418.21 404
- Non-Ut BU 30 42
- Imports BU 2 2
- Availability BU 450.21 448
* The difference of consumption minus production plus
imports would be bridged from stocks liquidation.
* The crude oil production target of 47.08 million tonnes
in the terminal year of Eighth Plan, indicated in later part,
was based on estimates of crude oil production from existing
fields, at the start of Plan, and development of discovered fields
during the Plan period.
the transport sector and the industrial sector due to a complete phasing out of the steam engines and a lower demand from the brick kilns and other small industries. The reduction in demand for petroleum products is mainly accounted for by the transport and the agricul- ture sectors. The requirement of natural gas as feedstocks and as an industrial fuel is now estimated to be higher than projected at the time of the Eighth Plan formulation.
Dependence on Imports 6.11 The energy strategy includes maximising satisfaction of demand for energy form the indigenous resources in order to reduce the nation's dependence on imported energy. The Eighth Plan has laid considerable emphasis on this very important aspect of the energy strat- egy, particularly with regard to oil and oil products imports. As mentioned in the Plan document, any sizeable increase in the quan- tum of oil imports increases the vulnerability of the economy to the uncertainties of the external markets as well as results in an outgo of scarce foreign exchange. In view of this, the Eighth Plan underlines the importance of man- aging the oil budget so as to restrict the oil imports, as far as possible, to the level obtain- ing in 1991-92. However, as mentioned above,
230
Table 6.4
Requirement of Primary Commercial Energy in 1996-97 (Mtoe)
1996-97
As per 8th Revised
Plan Estimates
Indigenous Production
Coal & lignite 137.96 134.16
Crude oil 51.18 39.50
Natural Gas 27.75 23.64
Hydro power 8.03 7.27
Nuclear power 2.46 2.27
Total 227.38 206.84
Net Imports 34.59 44.54
Intl. Bunkers (-)0.42 (-)0.21
N.Gas Flared (-)1.42 (-)1.21
Primary Comm. Energy Requirement 260.34 249.96
the net import requirements of oil and oil prod- ucts in 1996-97 are estimated to be 37.415 million tonnes as compared to 30.503 million tonnes in 1991-92. The rising trend in the oil imports is likely to continue in future in wake of the increasing demand for oil products and sluggish trends in addition to oil reserves and production.
6.12 The mid-term appraisal of various sub- sectors of energy sector is given in the follow- ing paras.
PETROLEUM AND NATURAL GAS
SECTOR 6.13 The following areas of concern and major programmes were identified for the hydrocar- bons sector while formulating the Eighth Plan.
(i) Need to restrict oil imports to reasonable level through a) improvement in effi- ciency of use of petroleum products; b) demand management; and c) inter-fuel substitution. Efforts should be made to achieve demand reduction of atleast 6-7 million tonnes by 1996-97. (
ii) Maximise indigenous production of' crude oil including additional production by the rehabilitation of sick and idle wells.
(iii)Initiation of hydrocarbons exploration in the phased manner in deeper continental shelf and greater participation in overseas exploration ventures.
(iv) Augmentation of domestic refining capac- ity to about 65 million tonnes by 1996-97 Any further addition to refining capacity would need careful evaluation of relative economics of import of crude vis-a-vis petroleum products.
Table 6.5
Revised Estimates of Final Commercial Energy Requirement in 1996-97.
(In Mtoe)
1991-92 1996-97
Projected Rev. Est.
Coal & Lignite 42.69 52.95 50.02
Pet. Products 55.25 80.02 72.34
Natural Gas 6.90 10.80 12.09
Electricity 19.86 28.88 28.78
TOTAL 124.70 172.65 163.23
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(v) Highest priority to be accorded to cost effective debottlenecking schemes and low cost expansion for refining capacity additions.
(vi) Priority to be given to energy use optimi- sation, energy conservation and schemes of product quality improvement in refin- ing sector.
(vii) Need to eliminate flaring of natural gas at the earliest, in any case not later than 1996-97.
(viii) Maximisation of production of LPG, set- ting up of facilities for city gas distribu- tion, promoting use of CNG in transport sector.
(ix) Need for attracting more private sector investment in exploration and production and refining and marketing sectors.
6.14 As regards physical programmes of work the following targets were fixed for major ac- tivities:-
1992-93 1996-97 Cumulative
1. Crude Oil Production 28.47 47.08 197.32
(Million tonnes)
2. Natural Gas Production 19.28 30.18 125.42
(Billion cubic Metres)
3. Natural Gas Despatches 12.74 22.92 89.48
(Billion cubic metres)
4. Accretion to Hydrocarbon * * 1325
Reserves
(Million tonnes oil and
oil equivalent gas)
5. Demand for Petroleum 60.71 81.19 348.60
Products
(million tonnes)
6. Build up of domestic 51.82 65.00 -
refining capacity
(million tonnes)