Arvind Mahajan, executive director, advisory and head energy, infrastructure and government, KPMG said, “The general theme of private participation and competition has advanced in the past one year with some concrete examples on the ground to substantiate it. Looking ahead, the Atomic Energy Act is expected to be modified shortly allowing private participation and anticipating this many large Indian and international players have started discussions for possible tie-ups,” he said.

“Along with private participation, there is a move to bring in market mechanisms in the energy sector under an independent regulatory oversight. A gradual approach is important till the supply side position improves and more players enter the sector so that markets can work effectively,” it said.

“The Government is seen as making efforts to broaden the supply base both internally and externally. It is intended to diversify the fuel basket by increasing shares of natural gas, hydro and even nuclear energy. At the same time, both Government and private sector companies are looking to acquire equity in energy assets abroad as seen in recent examples in the oil & gas and coal sectors,” it said.

Tariff reform in the energy sector and distribution reform in the power sector are two important steps that need to be successfully carried out. “Tariff reform to phase out subsidies or to target them effectively and distributin reforms to bring efficiency in the power sector are vital. Steps have been taken in this direction with mixed results. Going forward, this is an important area to manage,” it said.

... contd.