Policy Wise: India’s Power Sector

Why India needs a Ministry of Energy?

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much

Mains level : Paper 3- Coal shortage issue

Context

The blame cannot be placed on the doors of any one entity or ministry for the shortage of coal.

Ministries linked with coal shortage issue

  • The Ministry of Coal and Coal India must certainly accept that they slipped up somewhere — whether in managing the production process, planning supplies or leaving vacant crucial leadership positions.
  • The Ministry of Power/NTPC should also accept responsibility as they allowed coal inventories to fall below the recommended minimum in an effort to better manage their working capital.
  • But they can claim they had no other option because the state government electricity distribution companies do not pay their dues on time or fully.
  • The discoms will point a finger at their political bosses, who compel them to sell electricity to residential and agricultural sector consumers at subsidised tariffs.

Structural issues

  • There is no one public body at the central or state government level with executive oversight, responsibility and accountability for the entirety of the coal value chain.
  • This is a lacuna that afflicts the entire energy sector.
  • It will need to be filled to not only prevent a recurrence of another coal crisis but also for the country to realise its “green” ambition.
  • The word “energy” is not part of the political or administrative lexicon.
  • At least not formally. As a result, there is no energy strategy with the imprimatur of executive authority.
  • The NITI Aayog may well challenge this statement.
  • For they have produced an energy strategy.

Suggestions

  • Energy act: The government should pass an Act (possibly) captioned “The Energy Responsibility and Security Act.”
  • This Act should elevate the significance of energy by granting it constitutional sanctity; it should embed in law, India’s responsibility to provide citizens access to secure, affordable and clean energy.
  • The law should lay out measurable metrics for monitoring the progress towards the achievement of energy independence, energy security, energy efficiency and “green” energy.
  • Ministry of energy: Towards the fulfillment of this mandate, the government should redesign the existing architecture of decision-making for energy.
  • Preference would be for the creation of an omnibus Ministry of Energy to oversee the currently siloed verticals of the ministries of petroleum, coal, renewables and power.
  • The department would have a narrower remit than the other energy departments but by virtue of its location within the PMO, it would, de facto, be the most powerful executive body with ultimate responsibility for navigating the “green transition”.

Benefits

  • It is important to stress the positive impact the above redesign will have on investor sentiment.
  • Several corporates have signaled their intent to invest mega bucks in clean energy.
  • Reliance has committed $10 billion, Adani $ 70 billion over 10 years; Tata Power, ReNew Power and Acme Solar have also placed their stakes in the ground.

Conclusion

Energy sector will be immensely benefited if the current fragmented and opaque regulatory, fiscal and commercial systems and processes were replaced by a transparent and single-point executive decision-making body for energy.

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