India needs $100 billion energy boost to meet demand annually: IEA’s Fatih Birol
India must spend $100 billion every year to meet the ballooning energy demand of its expanding economy, International Energy Agency’s chief economist Fatih Birol said on Monday. “India needs three things for its energy sector — investment, investment and investment,” Birol said, laying emphasis on India’s need to attract investment in the energy sector. The country’s energy needs have rocketed in the past decade, when its economy grew at 7% on average despite global hiccups. Many of India’s power plants are lying idle while coal, oil and gas production have struggled to rise for years.
Meanwhile, a growing prosperity has pushed up energy needs of households, offices and factories, leaving a wide gap between the demand and supply in one of the fastest-growing economies in the world. Birol said the investment of $100 billion every year should be split with onefourth going to coal, oil and gas sectors and the rest in developing power generation and transmission capacity. He didn’t offer details on how he had arrived at the $100 billion a year figure.
For an investment of this scale, India needs to attract international capital, he said. International investors are ready to invest but are waiting for the “right conditions” of price and legal framework, he said.
“When I look at the last six months of the government, they seem to be moving in the right direction,” Birol said, referring to the government’s decision on gas prices and other policy pronouncements. He said he expects the government to resolve the legal issues in a year and thereby enhance the confidence of international investors.
India’s retrospective tax legislation, brought in by the previous Manmohan Singh government, rattled international firms in the country. The government’s demand from oil and gas explorer Cairn India and former UK parent Cairn Plc to pay about Rs 20,000 crore in capital gains tax and interest for an eight-year old transaction induced uncertainty among investors.
Late last year, the government introduced a formula to calculate the price gas producers can charge for output from local fields. The price is revised every six months based on the average rates at international energy hubs.