The Hindu Business Line : Towards energy conservation and rational pricing

AS the Prime Minister, Dr Manmohan Singh, launched a multi-sectoral National Campaign on Energy Conservation on Tuesday here with the twin objectives of fostering public awareness of the importance of energy conservation and to make people part of the energy conservation drive by optimising the use of energy, the message is loud and clear.

India with inadequate financial resources and reliant on imported crude for three-quarters of its fossil fuel demand can ill-afford to fritter away its precious energy through lack of a cohesive strategy.

The Minister of Petroleum and Natural Gas, Mr Mani Shankar Aiyar's colourful phrase `synergy in energy' would look devoid of meaning if the United Progressive Alliance (UPA) Government failed to get its act together to evolve a rational pricing policy for important sources of energy.

This is precisely the reason why the Prime Minister, while giving away national energy conservation awards to industries in the capital, cryptically contended thus: "Without an economic pricing policy, albeit the one that is sensitive to social inequities and income disparities, it will not be possible for us to sincerely address the challenge of energy conservation."

Dr Singh pertinently urged the industry and trade to make their research agenda to be sensitive to the imperative necessity of promoting maximum possible conservation of energy that provides the built-in incentive for consumers to voluntarily try and conserve energy through its optimal and rational utilisation.

The Prime Minister did not underplay the proposition when he said, "this multi-faceted approach should be adopted in the pricing of all forms of energy including petroleum, LPG, kerosene, water and electricity."

Dr Singh is not off the mark when he observed "the free supply of power in rural areas has the effect of not only encouraging excessive use of power when it is in on offer, but also of encouraging the wasteful use of ground water.

"In many parts of our country, ground water levels have been falling at an alarming pace and the excessive application of water is encouraging irrational cropping pattern as well."

Dr Singh more than once singled out power sector in his speech and repeatedly warmed to the focal point that "in the final analysis, economic pricing is probably the best way to ensure economic and efficient use of any asset or resource".

His views that "the experience of the last decade shows that we may have placed the cart before the horse by encouraging private investment in generation without adequately addressing questions of pricing and distribution" and the "solution to the problem of power wastage and the best answer to the challenge of power conservation in fact lies in the pursuit of rational pricing and distribution policies" once again reveal his abiding concern to make a modest start in rational pricing of power and his unconcealed disapproval of free supply of power by State Governments in a patently populist move.

The Planning Commission and its Deputy Chairman, Dr Montek Singh Ahluwalia, too have been underscoring the importance of bringing a modicum of minimum pricing reform in energy sector and in particular in the power sector.

The Plan panel has said that electric power is clearly the single largest cause of concern to the economy, as progress in this field has clearly been "disappointing". While there have been a number of experiments in State Electricity Board (SEB) reform including the one fashioned by Dr Ahluwalia himself, when he was a Member of the Plan panel in the previous regime, none of them has yet established "a viable model", the Plan panel rues. "Populism by State governments continues to be an impediment to following a rational electrification strategy".

With the UPA Government committed to complete electrification of all household in the next five years, there are not many choices other than pursue a rational pricing policy since this alone is the "single most important energy conservation step" as the Prime Minister himself put it.

The Union Power Minister, Mr P.M. Sayeed, said in Lok Sabha during question hour on December 14 that in a country where electricity shortage is 6 to 7 per cent and peaking shortage 10 to 11 per cent, energy conservation is the only viable option. Random studies establish that 23 per cent of energy could be saved which is equivalent to 25,000 MWs.

The litmus test for the UPA Government is whether it would seriously institute conservation measures including rational pricing of energy in the coming days or live down its celebratory commitments of December 14 before long?