The Hindu Business Line : Towards energy reconfiguration

Company A invests in a new power station to sell electricity, and claims tax relief. Another company manufactures energy-efficient refrigerators to make the new power station unnecessary, but gets no tax relief on investments.

Such anomaly, replicated across the entire energy infrastructure, skews the pattern severely in favour of more investment to deliver fuels and electricity, and less investment to deliver better energy services, laments Walt Patterson in Keeping the Lights On: Towards Sustainable Electricity ( www.vivagroupindia.com ).

“Traditional tax regimes encourage investment in infrastructure that makes money, rather than in infrastructure that delivers the energy services we citizens want,” he adds. “In our modern interconnected society the prices of fuels and electricity by the unit have long been essentially artificial, shaped by preferential tax regimes, subsidies and cross-subsidies, cartels and outright monopolies, as in the case of electricity networks.”

An apt quote of Patrick Moriarty of Ireland’s Electricity Supply Board, cited in the book captures the abnormality in a succinct manner, thus: “The price of electricity is what the government wants it to be.” What with taxation, subsidies and other interventions, much the same can be said of fuels, frets Patterson.

Real energy policy, he argues, should be far wider in scope than fuel and power policy. Going “beyond batch transactions in commodities, the policy levers should include asset accountancy, asset taxation and the related measures affecting investment in infrastructure of every kind, particularly energy-service infrastructure.”

Favourable tax treatment for integrated, optimised local systems, possibly including cogeneration delivery, both electricity and heat, will give a powerful boost to the requisite reconfiguration, the author suggests. “Government procurement for its own buildings and other facilities can set an example.” The most potent of policy levers is asset taxation, the tax treatment of buildings and other energy technologies, proposes Patterson.

A book you can profitably burn the midnight oil for.

Power shifts

The global economy presents some daunting realities, observes Mark Engler in How to Rule the World: The Coming Battle Over the Global Economy. ( www.landmarkonthenet.com ). “Both corporate and imperial models of globalisation have failed to create real peace or prosperity for the majority of people on the planet.”

The good news, however, is that the big failures are fuelling a drive for a better international order, a democratic globalisation, he adds. “Local communities, national governments, and international social movements are all seeking out more equitable ways to manage work, investment, and trade.”

In a chapter titled ‘Latin America in revolt,’ the author narrates the tale of Evo Morales, whose anointing in January 2006 as Bolivia’s president marked the transfer of leadership for the first time in 500 years. “In Latin America, the chasm between the wealthy and the destitute is the most extreme in the world. Presidents, especially in the era of neo-liberalism, have invariably come from the fortunate side of the divide — the side whose young people make shopping trips to Miami and train in US universities.”

From 2003 to 2005, massive demonstrations rocked Bolivia, with crowds protesting against IMF-imposed tax hikes and the privatisation of the country’s national gas resources, recounts Engler. “Protesters fought off police repression, blockaded roads, and ultimately forced the resignation of two presidents.” As the candidate for the MAS (Movement toward Socialism party), Morales highlighted the plight of the poor, vowed to defend ‘Pachamama’ (or ‘Mother Earth’), and his ‘campaign motorcade proudly waved the ‘wipala’, the multi-coloured chequered flag that is a symbol of native pride and resistance.’
Morales won by a landslide, and on taking office, he cut his own presidential salary by more than half, and condemned corruption and ‘pillaging of the country’ by past politicians. “Since the turn of the millennium, boisterous popular movements throughout Latin America have overthrown neo-liberal governments and demanded genuine democracy,” writes Engler. “They have created new generation of leaders that looks very different from the region’s typical rulers, and they have fought to hold these officials accountable.
A few weeks ago, Morales announced that Bolivia’s oil and gas tax revenue is set to rise 30 per cent this year, as a result of the nationalisation of refineries and storage installations. “Oil and gas revenue will rise to about $2.5 billion from $1.93 billion in 2007, Morales said, after the government on May 1 seized a majority stake in four energy companies — Spain’s Repsol YPF SA, the UK’s BP Plc and Ashmore Group, and Germany’s Oiltanking GmbH,” reported www.bloomberg.com in a story dated May 17.
Recommended read to know about the big power shifts.

D. MURALI
http://BookPeek.blogspot.com

More Stories on : Books | Books of Account

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Mid-size wonders

Ads sans brands are bland

Ranbaxy stake sale — When predator turned prey

Pakistan’s Army — Firm grip on country’s reins

‘IPL franchisees may have better margins than Arsenal, Man U’

Valuing art: The role of provenance and auction

Towards energy reconfiguration

Tackling high oil prices