Energy pricing must provide incentives for investment: PM

Making it clear that the government was concerned about energy security, Prime Minister Manmohan Singh said appropriate energy pricing was crucial to ensure investments in the energy sector especially in the wake of fluctuating global prices and supply. As India faces growing import dependence, Singh said energy pricing and acquisition of overseas assets would be key components of the new integrated policy.

“From all available information, we are also likely to be increasingly import dependent. This makes us vulnerable to uncertainty of international prices and reliability of supplies. Energy pricing is a key component of energy policy, since appropriate energy pricing must provide the incentives needed for efficient use of energy and also the incentive for investment in expanding supplies,” Singh said.

The meeting comes ahead of Singh’s visit to the US, where he is expected to sign the nuclear agreement that would pave the way for resurgence of atomic energy in the country. “Currently, policies relating to individual energy sectors are set by a number of different ministries reflecting historical evolution. This means the policies followed in different sectors are not always internally consistent,” he said.

Singh added that it was critical to have an Integrated Energy Policy based on a consistent application of economic principles across different energy sources.

The IEP has been designed on the basis of a common carrier principle where fair participation of both public and private sector could be promoted. Advocating market-determined prices of energy, the draft IEP says energy needs of the poor deserve special attention. It said that though certain susbsidy was essential, it must be appropriately crafted to plug leakages. “Some subsidy is essential but must be appropriately designed to minimise leakage,” Commission deputy chairman Montek Singh Ahluwalia said.

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