The Hindu Business Line : Energy policy on backburner

Several reasons have been offered for soaring prices: increasing consumption, especially in the newly developing economies of China and India, the fall in new discoveries with the result that oil is a depleting resource, geopolitical tensions in Iran, unrest in Nigeria, the prospect of hurricane damage to US refineries and the speculative activity of hedge funds.

And forecasts are also a party-pooper for consumers: short-term supply disruptions and the long-term demand-supply imbalance could cause prices to shoot up to $100.

What has been our policy response to the supply-chain, growth and inflation — threatening global oil market and economy?

It is almost zilch — no active moves even to build a strategic reserve to manage a sudden cut off of imports, which is the minimum one would expect. (If there is any such plan, it is a well-kept secret).

The most that we have come up with is how much of the rise in international prices should be passed on to the consumers.

A special committee had to be set up for the purpose.

The outcome was that it is not sound fiscal policy for the Government to bear any of the burden! It was, in fact, left to the most unlikely source (in a figurative sense) to talk of the seriousness of the situation.

The President, Mr Abdul Kalam, who is only the constitutional head of State with no role in policy or decision-making, set out a comprehensive energy policy in a recent speech.

It seems the Rashtrapathi Bhavan is more engaged than the several Ministries in whose domain energy matters are and whose job is to evolve feasible strategies to meet the nation's energy needs today and tomorrow. As Presidents go, Mr Kalam is, of course, unique.

One hopes that at least his unsought contribution will stir the Government out of its somnolence.

If oil prices continue to go up at this rate, we are looking at significant trade deficits in the coming years. Will our exports make up the gap? Our present (relatively) strong forex reserves (much of it repatriable foreign investment) should not lull us into a false sense of complacency. A problem with ominous implications is on the backburner.

Sweden, among the richest countries in the world, has embarked on a mission to convert to renewable energy in 10 years.

Contrast this with our obsession with capital account convertibility, foreign investment, disinvestment and the narrow question of petro-pricing and you realise why we still remain a backward nation.

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