The Hindu Business Line : $10-b worth pvt investments needed in energy sector: KPMG

Clear policy must
Mineable coal reserves could be exhausted in about 40 years.
To attract private investments, the Government must evolve a clear policy framework in the energy sector.
Government should enter into partnerships with key nations to diversify its energy supply base.

A COAL mine in Upper Assam. The country's coal reserves will last only for 40 years, according to the KPMG report. — Ritu Raj Konwar

New Delhi , April 5

India will need private investments to the tune of $9-10 billion in the energy sector over the next five to six years to bridge the demand-supply gap, according to consulting firm KPMG.

In order to attract and sustain private investments, the Government will have to evolve a clear policy framework in the energy sector with clarity in matters such as energy pricing, market structure, cross-border investments and imports and exports of energy products, KPMG said in its `India Energy Outlook' released here.

KMPG estimates that since the country's energy requirements could jump four-fold over the next 25 years, the Government should enter into partnerships with key nations to diversify its energy supply base and improve long-term supply arrangements.

"With energy requirements expected to grow at five or six per cent per annum, there is an urgent need for India to strategically re-evaluate its supply options," said Mr Partha Bardhan, Head of KPMG's Energy practice in India. The report said India's mineable coal reserves could be exhausted in about 40 years.

Mr Bardhan said coal could not be relied on forever, while hydrocarbon reserves in India were "meagre." Hydroelectric and nuclear power seemed to be the obvious options, but an improved framework was needed to attract private sector, he added.

The report favoured deregulating the coal sector and setting up an independent body to govern investments in the sector. The report said that India's energy requirements and availability of sources also imply that it would have to build 250,000 MWe of nuclear capacity by 2050.

The rethinking of India's energy policy - necessitated by its burgeoning energy demands - is set to open up numerous private sector investment opportunities across all the key sectors, it said.

The report said that demand for oil is set to grow at 3.6 per cent whereas supply is growing at approximately 2.5 per cent. The demand-supply mismatch is catapulting India with China, with the two countries accounting for 35 per cent of the world's incremental energy demand.