New Delhi: Pushing Indian energy companies to become multinationals, Prime Minister Narendra Modi on Monday outlined a vision for creating energy corridors to the Middle-East, Central Asia and South Asia, saying stable and reasonably-priced energy is key to economic development.
The world's third-largest energy consumer needs to raise domestic oil and gas production to cut imports as also establish partnership with regional energy powerhouses, he said while addressing the inaugural session of Petrotech conference here.
"Energy is a key driver of economic growth. Sustainable, stable and reasonably priced energy is essential for the fruits of economic development to reach the bottom of the pyramid," he said. "On one hand, to meet the increasing demand, we need affordable and reliable sources of energy. On the other, we must be sensitive towards the environment."
The prime minister said hydrocarbons will continue to play an important part in India's growth, but the country needs energy that is accessible to the poor as also efficiency in use and energy security.
"Energy in general and hydrocarbons in particular is an important part of my vision for India's future," he said adding that it rests on four pillars of energy access, efficiency, sustainability and security. Stating that the country needs to increase domestic oil and gas production and reduce import dependence, he said, "I have set a target to reduce import dependence by 10 per cent by 2022. This will have to be achieved during the period of increasing oil consumption."
Hardselling a strong, investment-friendly policy framework to boost domestic hydrocarbon production, Modi said a new hydrocarbon exploration and production policy has been introduced to provide for uniform licence for exploration and production for all forms of hydrocarbons, including shale oil and gas and coal bed methane. This also covers open acreage policy allowing bidders to choose the acreage they wish to explore, revenue sharing model instead of profit sharing to reduce any scope for disputes and marketing and pricing freedom for crude oil and natural gas produced.
He attributed the $5.6 billion investment in Russian oilfields that will provide 15 million tons of equity oil equivalent, to a proactive foreign policy and energy diplomacy. "I hope that our oil and gas sector companies will take the opportunity to tie up with their foreign counterparts to explore for more equity oil... Indian energy companies must become multinational and work towards India-Middle East, India-Central Asia, and India-South Asia energy corridors," he exhorted. He called on global hydrocarbon companies to come and Make in India.
"Our constant efforts have improved India's ranking in Ease of Doing Business. Let me assure you that our commitment is strong and our motto is to replace red tape with red carpet." Stating that hydrocarbons will remain the most important source of energy for many years to come, the prime minister said India is poised to account for one fourth of the incremental global energy demand between 2013 and 2040. It is expected to consume more oil in 2040 than the whole of Europe.
India, he said, is the world's fastest-growing large economy today and is expected to grow five-fold by 2040. Growth is supported by a series of policy measures that are "focussed on improving India's long-term economic and social prospects rather than short-term headlines. Our efforts are showing results in terms of economic growth and development," he said while asserting that manufacturing will account for 25 per cent of GDP by 2022 as against 16 per cent now. For good measure, the Prime Minister put the spotlight on India's resilience to global headwinds.
"Apart from fast growth, our economy has also been more stable than most others. While the global economy is going through a period of uncertainty, India has shown tremendous resilience," he said.
The current account deficit (CAD) is at a decades low and FDI at the highest level at a time when global FDI has fallen, he said, adding that according to the Bank of International Settlements, India is less vulnerable to banking distress among the major economies.
Modi also talked about a likely manifold increase in transport infrastructure, with commercial vehicle population of 13 million projected to reach the 56 million mark by 2040. In civil aviation, India is the eighth largest market in the world and set to become the world's third largest by 2034.
Growth in the aviation sector is expected to raise demand for aviation fuel four times by 2040. All this will impact energy demand, he said. For energy access, the government has launched the Ujjwala programme to provide 50 million families free LPG connections and provide piped cooking gas to 10 million houses in the next five years.
Also, the national gas grid network is being doubled to 30,000 km to ensure every village in India has access to electricity by March 2018, he said. Capital investment in the railways has been more than doubled, dedicated freight corridors built, high speed rail corridor conceptualised and waterways provided focus for energy efficiency, he said.
"The long-awaited legislation on a national Goods and Services Tax has been passed. By removing physical barriers at state boundaries, GST will accelerate long haul transport and further increase efficiency." While developing countries know sensitivity of energy pricing, India has de-controlled petrol and diesel prices and cooking gas price too is now determined by the market.
"To protect the vulnerable and the middle class, a subsidy is paid directly to 169 million bank accounts. This has eliminated leakages and misuse of cooking gas subsidies, resulting in large fiscal saving. These measures too have increased the efficiency of energy use," he stated.
Modi spoke about India taking the lead in committing itself to a reduction of 33 per cent in carbon intensity of its GDP from its 2005 level over the next 15 years and its commitment to produce 40 per cent of power from non-fossil fuel by 2030. "I have set a massive target of 175 gigawatt of renewable energy by 2022. Thanks to our efforts, capacities have increased and prices of renewable energy have crashed," he added.
The recently concluded marginal field bid round, wherein 67 fields holding in-place oil reserves of 89 million tonnes were offered, received "encouraging response" with several global companies participating. The Prime Minister said the downstream sector is now more open, creating a level playing field for all market players.
"Natural Gas is the next generation fossil fuel - cheaper, and less polluting. We have given priority to moving towards a gas-based economy. Efforts must be made to increase natural gas production while also creating import infrastructure to meet the growing domestic demand," Modi stressed.
India, he said, needs to be very efficient in terms of project and resource management. He made the point that this is an area India needs to improve on to remain competitive. "This will not only improve our refining and processing efficiencies, but ensure timely and efficient project completion," Modi said.
The Prime Minister is of the view that natural gas will have an important balancing role as India's renewable energy output rises. "To provide balance..., gas-based power will be critical," he emphasised.