New Delhi: Hardeep Singh Puri, Minister for Petroleum and Natural Gas, said that India has successfully been able to navigate its energy trilemma and modulate the effective price of fuels to consumers, thus insulating the common man from price rise and volatility in international prices. Speaking at a session titled ‘Powering Amrit Kaal Through Energy Transition’ at the CII Annual Session 2023 on May 24, he said that while nations in India’s neighbourhood perhaps even in developed countries might have struggled with energy rationing, pump dry-outs and spiralling fuel prices, among other concerns, India’s policy successfully ensured a sustained availability of fuel. This has led to the lowest price inflation in the world, he said.
Puri highlighted that there was a need to ensure stable, secure and affordable energy supplies as India continues on its fast trajectory of growth towards a USD 5-trillion economy and then to a USD 10-trillion economy. He stated that reforms in the energy sector in general, and the oil and gas sector, in particular, demonstrate India’s commitment to energy security, ease of doing business, and energy transition.
Recently, in a major policy decision, the Cabinet approved a series of critical gas pricing reforms. In the absence of these decisions, Puri said, gas prices would have been uncompetitive to alternative fuels and would have hindered the expansion of the gas-based economy. The prices of gas for priority consumers would have increased by about 10 percent in the next half-year and continued to rise in the subsequent periods, the minister further said. Now, the Administered Price Mechanism (APM) prices will be determined monthly at 10 percent of the average Indian Crude Basket Prices, with a ceiling (US $6.5/MMBTU) and floor (US $4/MMBTU). The ceiling will remain the same for the first two years and then increase by US $0.25/MMBTU every year, to adjust for any cost inflation.
He added that the general public has already started reaping the benefits of this decision. India has already seen the average cost of PNG go down by about 10 percent whereas there has been a 6-7% percent reduction in CNG prices.
“These reforms are part of India’s ambitious journey of energy transition, which shall culminate in India achieving ‘Net Carbon Zero’ by 2070. However, for the transition to be enduring and stable in the future, it is imperative that we survive the present, and accessibility and affordability aspects of energy remain intact,” said Puri.
Stating that India’s energy demand is expected to grow at about 3 percent per annum till 2040, compared to the global rate of 1 percent, Puri said that since 2000, India has been responsible for more than 10 percent of the increase in global energy demand. On a per capita basis, energy demand in India has grown by more than 60 percent since 2000. A quarter of the global energy growth between 2020 and 2040 is going to come from India due to our fast-growing economy and demographic dividend.
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