Jaiprakash Ranjan, New Delhi. The turmoil in the global energy market after the Ukraine-Russia war has clearly affected India’s economy and the life of the common Indian. Due to the inflation of crude in the international market, not only India’s inflation rate is becoming uncontrollable, but the common middle class has been burdened heavily. Similarly, due to the huge increase in natural gas prices, questions are also being raised on the target of increasing the share of gas in the country’s economy to 15 percent by the year 2030. So due to rising coal prices it has become difficult to import coal and this is affecting the production of electricity in the country. If the Reserve Bank of India is to be believed, there is a need to formulate a comprehensive energy planning strategy keeping in view the challenges of the energy sector and the country’s net zero emission target by the year 2070.
In the currency and finance report of RBI released recently, a detailed assessment of India’s energy situation has been done. It states that crude oil production has been located in India since the early 1990s and in fact India’s dependence on imported oil has increased in the last ten years. Natural gas production is also declining steadily. The limited technical capability of domestic companies is also one of the factors that have been attributed to this. The RBI has said that due to India’s increasing dependence on foreign countries for the above three products, the country has to suffer in the event of their rising prices in the international market and disturbances in the global supply chain. Although there is a possibility of some production increase in some domestic fields by the end of the year 2022, but how much effect it will have remains to be seen. The central bank has made two important suggestions in this regard. First, ONGC and private companies should try to increase production through foreign technology. Second, the central government should allow companies to charge better prices to attract investments.
RBI’s suggestion to formulate a comprehensive energy strategy also appears to be valid considering the gas prices in the international market. Prime Minister Narendra Modi has set a target of increasing the share of gas in the country’s economy from the current 6 per cent to 15 per cent by 2030 by the concerned ministries. But efforts by the government to increase gas production from domestic fields have not yielded any significant results so far. British Petroleum, Shale Gas and International Energy Agency have different estimates that by the year 2035, the share of gas in the Indian economy may increase to a maximum of 10 percent. Gas power plants of about 24 thousand MW are unable to generate electricity due to shortage of gas. India’s challenges have been compounded in recent years by the steep rise in the prices of natural gas in the international market.
In the year 2021, Indian companies bought gas from the international market at an average rate of $10 per million metric British thermal units (MMBTU – the international standard for measuring gas), while the deals that have been done in the last two months cost $ 22-24. per mmBtu. According to the RBI, India has the world’s largest coal reserves while India ranks third in terms of production. But most of the coal found in India has a high calorific value (heat released on burning) and produces a lot of ash, which is a major problem for disposal.
Keep in mind that on the side of crude and gas, coal has also become very expensive in the international market. After Russia’s attack on Ukraine, European countries are also buying coal so that they can make coal-based electricity when the gas supply from Russia is cut off. The price of coal had tripled to $400 a tonne in the middle. It is still around $320 to $380 a tonne, which averaged $100 a tonne last year. This is one of the reasons why state governments or thermal power units are reluctant to import coal from abroad despite pressure from the central government.
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