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Mint
27-05-2025
- Business
- Mint
Energy security: India needn't be staring at a $1 trillion import bill
As India races towards economic superpower status, a glaring vulnerability threatens to undermine our progress: our dependence on imported oil and gas. According to the Petroleum Planning & Analysis Cell (PPAC), India's crude oil import dependency has reached 87-88%, with projections suggesting it may exceed 90% by 2030. This trajectory could result in a staggering $1 trillion energy import bill over the next five years. The decline in domestic production makes for disheartening reading. Our crude oil output has fallen from over 36.9 million tonnes in 2015-16 to just 29.7 million tonnes in 2023-24, even as our consumption stays on a relentless upward trajectory. Natural gas presents a slightly better picture, with import dependency at 50-55%, but rapidly rising demand threatens to widen this gap as well. Also Read: Counter-intuitive: Why Opec wants lower oil prices On paper, India holds significant hydrocarbon potential: around 210–215 billion barrels of oil and oil-equivalent gas across 3.14 million sq km of sedimentary basins. Yet, only half this area has been explored. Without aggressive efforts to explore and develop these reserves, this potential will remain untapped. To its credit, India's government has implemented several policy initiatives to stimulate upstream activity. The Hydrocarbon Exploration and Licensing Policy (HELP), introduced in 2016, replaced the previous New Exploration Licensing Policy with a revenue-sharing contract (RSC) model, uniform licensing for all hydrocarbons and promised marketing and pricing freedom for new gas production. The Open Acreage Licensing Policy (OALP) allowed companies to select exploration blocks year-round, rather than waiting for formal bid rounds. While more than 150 blocks have been offered across nine OALP rounds since 2018, the results have been modest. Participation has declined and international oil companies—crucial for capital and technology—remain largely absent. The recent OALP-IX round in 2024 saw only eight blocks awarded, primarily to national oil companies. Also Read: Crude comfort: Let's not lose sleep over India's rising oil dependency A core issue lies in the shift from production sharing contracts (PSCs) to the RSC model. This structure places greater upfront risk on explorers—particularly problematic in under-explored regions where geological uncertainty is high. Countries like Mexico, Brazil and Colombia offer counter examples. Mexico retained PSCs for high-risk areas following its 2013 reforms, attracting over $40 billion in investment. Brazil's PSCs for its pre-salt reserves brought in significant capital and innovation. Even Colombia, with less prospective geology, succeeded by aligning fiscal terms with investor expectations. In India, despite policy improvements on paper, practical challenges persist. Administrative delays, unclear fiscal terms and perceptions of high risk deter global participation. The exploration landscape remains dominated by national firms like ONGC and Oil India Ltd. While their efforts are commendable, a more diverse ecosystem—including international majors and specialized independents—is essential to scale exploration meaningfully. Compounding this is the global energy transition. As decarbonization gains traction, traditional oil and gas investments face increasing scrutiny. Yet, in the context of India's economic growth and our long runway to net-zero by 2070, hydrocarbons will remain critical to India's energy mix for decades. Balancing immediate energy security with long-term sustainability requires strategic intervention for upstream exploration to attract capital. Also Read: Global oil market dynamics are shifting in favour of India's energy plans To address these challenges, India must adopt a multi-pronged and strategic approach. A key step is to revisit the fiscal regime and consider re-introducing PSCs, especially for frontier and high-risk basins where geological uncertainty is high. This model better balances risk and reward, as seen in countries like Mexico and Indonesia, which saw investment rebounds after adopting or enhancing PSC frameworks. Administrative complexities related to cost recovery—often cited as a drawback of PSCs—can be managed through appropriate delegation to tax authorities under the ministry of finance. Also, the National Seismic Programme must be accelerated to map India's sedimentary basins comprehensively. Employing advanced technologies to reduce geological risk will enhance investor confidence and guide better targeted exploration efforts. In tandem, the government should offer more attractive fiscal incentives for technically challenging or less-proven areas. These could include reduced royalty rates, extended exploration timelines, tax holidays and cost recovery allowances. The UK and Norway offer instructive examples of how tailored financial structures can sustain exploration even in mature or complex basins. Administrative streamlining is also essential. Simplifying approval processes and ensuring timely, transparent decision-making would go a long way in attracting investment. A single-window clearance system could help eliminate bottlenecks that frustrate developers and delay projects. To support risk-taking in exploration, particularly by smaller firms and new entrants, the creation of specialized exploration funds with built-in risk-sharing mechanisms could play a catalytic role. These funds could help diversify participation and reduce capital constraints for technically capable but financially constrained players. Additionally, strengthening the capabilities of national oil companies through strategic international partnerships would help accelerate technology adoption and improve operational efficiency. Institutions like the Directorate General of Hydrocarbons should be empowered with greater independence and resources, allowing them to function more effectively as regulators and facilitators of sectoral growth. Also Read: Rely on modern geothermal energy to power our AI ambitions The recent Oilfields Regulation and Development Amendment Act of 2024 modernizes the outdated 1948 law, addressing several industry pain points. It introduces faster dispute resolution, clearer contractual definitions and incentives for enhanced recovery. Importantly, it recognizes new exploration technologies. If the 2024 amendment is effectively implemented, it could reduce contractual uncertainty and unlock stalled projects. However, as global examples such as Kazakhstan show, legislative reforms must be accompanied by consistent administrative execution. Rules, notifications and clarity in application will determine the amendment's impact. The $1 trillion that India may spend on energy imports by 2030 is not just a financial burden, it is a lost opportunity to generate domestic jobs, spur innovation and achieve energy sovereignty. The roadmap is clear; the urgency now lies in execution. This is India's trillion dollar question. Our response will shape the nation's energy future and economic destiny for generations to come. The authors are, respectively, vice president of Pune International Centre; and managing director with Boston Consulting Group and founder member of Pune International Centre.
Time of India
13-05-2025
- Business
- Time of India
India's gas use at 5766 MMSCM, LPG coverage hits 102.8%: PPAC
New Delhi: India's total gas consumption averaged 5766.75 million metric standard cubic meters (MMSCM) per month as of March 31, 2025, according to the latest edition of the Oil and Gas Snapshot released by the Petroleum Planning & Analysis Cell (PPAC). Monthly petroleum products (POL) consumption stood at 19.93 million metric tonnes (MMT), with diesel accounting for 10.29 MMT and petrol 4.25 MMT. Monthly average LPG consumption was recorded at 2.6 MMT. The report shows that India had 329.7 million domestic LPG customers, including 103.3 million under the Pradhan Mantri Ujjwala Yojana (PMUY). The number of double bottle connection (DBC) customers stood at 148.1 million. LPG coverage exceeded 100 per cent , at 102.8 per cent , reflecting access saturation. Per capita annual consumption of 14.2 kg cylinders was 5.96, while among PMUY beneficiaries it stood at 4.47 cylinders. The average ethanol blending under the Ethanol Blended Petrol (EBP) Programme during November 2024 to March 2025 reached 18.36 per cent , with a total of 3.91 billion litres of ethanol blended. In the natural gas segment, onshore production stood at 827.45 MMSCM and offshore at 2106.97 MMSCM. PNG connections included 14.7 million domestic consumers, 20,253 industrial units, and 44,869 commercial consumers. The compressed natural gas (CNG) sales averaged 748.6 MMSCM per month, while piped natural gas (PNG) consumption stood at 95.6 MMSCM for domestic use, 24.6 MMSCM for commercial, and 400.9 MMSCM for industrial applications. Crude oil processing by refineries averaged 22.84 MMT monthly. Domestic crude oil production was 2.37 MMT, while monthly output of petrol and diesel was 4.25 MMT and 10.29 MMT, respectively. LPG production was 1.09 MMT. India's total natural gas consumption through the City Gas Distribution (CGD) network, comprising CNG and PNG segments, remains a growing contributor to the country's energy basket. Meanwhile, policy efforts including the PMUY and ethanol blending programme continue to influence clean fuel accessibility and energy diversification trends.
Hans India
04-05-2025
- Business
- Hans India
Consumption of diesel, petrol rises in April as economic activity picks up
New Delhi: India's consumption of petroleum products such as diesel, petrol and LPG recorded a significant increase in April this year, reflecting the rising level of economic activity in the country. India's diesel consumption rose to 8.24 million tonnes in April, which is the second highest monthly consumption ever, as demand from the agricultural and transport sectors grew during the month, according to data compiled by the Petroleum Planning & Analysis Cell (PPAC). The 4 per cent year-on-year growth came on the back of a high base in April 2024, when diesel consumption had surged by double digits due to the electoral campaigning for the Lok Sabha polls. The high growth in the consumption of diesel, which constitutes close to 40 per cent of fuel sales, reflects the higher economic activity in both the farm and logistics sectors of the economy. The fuel is also consumed in the industrial and mining sectors, which also account for part of the growth. Similarly, petrol consumption registered a growth of 4.6 per cent to 3.44 million tonnes in April. Petrol consumption last year had soared by 19 per cent due to hectic campaigning carried out by various political parties in the Lok Sabha elections. The growth comes on a high base as vehicle sales have been on the rise in a growing economy. LPG consumption also recorded a significant 6.7 per cent growth during the month to 2.62 million tonnes, as the Centre's Ujjwala scheme brought the fuel within the reach of poor families. Besides, commercial consumption of the fuel in hotels and restaurants has also gone up. The figures also show that the consumption of aviation turbine fuel (ATF) by commercial airlines in April was registered at 7,66,000 tonnes during the month, which represents a 3.25 per cent increase over the same month of the previous year. Meanwhile, the public sector oil companies on Thursday slashed the price of commercial LPG by Rs 14.50 per 19-kg cylinder while the price of jet fuel for airlines was cut by 4.4 per cent. The price of ATF was reduced by around Rs 3,954.38 per kilolitre (1,000 litres) to Rs 85,486.80 per kl, which will come as a shot in the arm for commercial airlines such as Air India and IndiGo as fuel accounts for around 30 per cent of their operational costs. The reduction in fuel prices comes against the backdrop of crude oil prices having fallen to a four-year low in the global market, with the benchmark Brent crude hovering at around $63 a barrel, the lowest since April 2021.
Indian Express
24-04-2025
- Business
- Indian Express
Daily subject-wise quiz : Economy MCQs on Monetary Policy Committee, safeguard duty and more (Week 107)
UPSC Essentials brings to you its initiative of subject-wise quizzes. These quizzes are designed to help you revise some of the most important topics from the static part of the syllabus. Attempt today's subject quiz on Economy to check your progress. Consider the following statements: Statement 2: High premiums and perceived low immediate need are driving a significant portion of the population to delay or avoid purchasing insurance. Which one of the following is correct in respect of the above statements? (a) Both Statement 1 and Statement 2 are correct and Statement 2 is the correct explanation for Statement 1. (b) Both Statement 1 and Statement 2 are correct and Statement 2 is not the correct explanation for Statement 1. (c) Statement 1 is correct but Statement 2 is incorrect. (d) Statement 1 is incorrect but Statement 2 is correct. — India's non-life insurance business, driven by the health segment, saw a decrease in growth during the fiscal year ending March 2025 due to an economic slowdown and insurers raising premiums across the board. — According to General Insurance Council data, the growth rate in health insurance — the largest segment in the non-life industry — fell to 8.98% in 2024-25 from 20.25% the previous year, with insurers' gross premium income at Rs 1.18 lakh crore in FY25, compared to Rs 1.08 lakh crore last year. Customers deferred their decision to get health insurance due to a steep increase in premiums and increased claim rejections. — The insurance sector's development has slowed due to inflation and stagnant salaries, causing consumers to prioritise necessary expenses. As a result, many individuals and organisations are reducing their discretionary expenditure, which includes health insurance payments. Hence, statement 1 is correct. — Industry experts warn that high premiums and perceived low immediate need are causing a sizable segment of the population to postpone or avoid acquiring insurance, particularly health insurance, entirely. This trend hindered the sector's expansion as insurers struggled to recruit new policyholders. Hence, statement 2 is correct. Therefore, option (a) is the correct answer. With reference to India's energy demand, consider the following statements: 1. India's energy demand has decreased swiftly, resulting in decrease in crude oil and natural gas imports. 2. India's oil import dependency for the financial year ended March was lower than the previous fiscal year. 3. Import dependency in the case of natural gas was far lower in FY25 compared to FY24. How many of the statements given above are correct? (a) Only one (b) Only two (c) All three (d) None — India's reliance on imported crude oil and natural gas increased further in 2024-25 (FY25), as the gap between demand growth and restrained local hydrocarbon output continued to widen. — According to interim figures from the oil ministry's Petroleum Planning & Analysis Cell (PPAC), India's oil import dependency for the fiscal year ending March was 88.2 per cent, up from 87.8 per cent the previous fiscal year (FY24). Import dependency for natural gas was 50.8% in FY25, up from 47.1% in FY24. Hence, statements 2 and 3 are not correct. — India's energy demand has been rapidly increasing, resulting in higher crude oil and natural gas imports. Growing energy-intensive sectors, increased automobile sales, a fast developing aviation industry, and rising petrochemical usage are all contributing to this trend, and a rising population. Hence, statement 1 is not correct. (a) It is imposed on imports from all nations to limit the import of a specific good and prevent harm to the domestic industry. (b) It is imposed on imports that are priced below fair market value to protect domestic industries. (c) It is imposed on the quantity of a specific good that can be imported or exported during a given timeframe. (d) It is imposed to offset subsidies provided by foreign governments to their exporters. Explanation — Amid concerns about dumping into India following hefty US tariffs on Chinese imports, the government has placed a 12% safeguard duty on non-alloy and alloy steel flat products. — This follows an inquiry by the Directorate General of Trade Remedies (DGTR), which found last month that there was a 'sudden and sharp' spike in imports that could 'cause serious injury to the domestic industry'. — According to the Amazon website, Safeguard duty is imposed on imports from all nations to limit the import of a specific good and prevent harm to the domestic industry. Therefore, option (a) is the correct answer. 1. This scheme is aligned with the Make in India initiative. 2. It seeks to strengthen the manufacturing backbone and reduce reliance on imports. 3. It was launched in 2018. 4. The pharmaceutical sector has been exempted from the scheme. How many of the statements given above are correct? (a) Only one (b) Only two (c) Only three (d) All four Explanation — The IT Ministry announced the Rs 22,919 crore incentive plan for electronics components, which follows its two PLI schemes, which primarily focus on the relatively simple assembly of electronics devices such as cellphones and PCs. — The PLI Scheme, which was launched in 2020, is more than just a policy; it is a strategic step towards self-sufficiency. Hence, statement 3 is not correct. — The PLI Scheme, which aligns with Atmanirbhar Bharat's goal and the larger Make in India effort, aims to strengthen the manufacturing backbone, reduce dependency on imports, and balance growth with sustainability. Hence, statements 1 and 2 are correct. — The effort targets industries such as electronics, textiles, pharmaceuticals, and autos, and provides financial incentives that are directly related to measurable outcomes such as increased output and incremental sales. Hence, statement 4 is not correct. — Production Linked Incentive (PLI) Schemes are for 14 key sectors, including Mobile Manufacturing and Specified Electronic Components, Critical Key Starting Materials/Drug Intermediaries & Active Pharmaceutical Ingredients, Manufacturing of Medical Devices, Automobiles and Auto Components, Pharmaceuticals Drugs, Speciality Steel, Telecom & Networking Products, Electronic/Technology Products, White Goods (ACs and LEDs), Food Products, Textile Products: MMF segment, and technical textiles, High efficiency solar PV modules, Advanced Chemistry Cell (ACC) Battery, and Drones and Drone Components. 1. The MPC is required to meet at least four times in a year. 2. It determines the policy repo rate required to achieve the inflation target. 3. There is no quorum for the MPC meeting. 4. It is an eight-member committee fully constituted by the Reserve Bank of India. Select the correct answer using the codes given below: (a) 1, 2 and 3 (b) 3 and 4 only (c) 1 and 2 only (d) 2 and 4 only — The drop in crude oil prices despite increased trade-related uncertainties will relieve pressure on domestic inflation, which is expected to reach the target during the current fiscal year (FY26), RBI Governor Sanjay Malhotra said at the Monetary Policy Committee (MPC) meeting. — The government has directed the MPC to keep consumer price index (CPI) inflation at 4 percent within a +/- 2 percent range. — Section 45ZB of the modified RBI Act of 1934 establishes an empowered six-member monetary policy committee (MPC) to be appointed by the Central Government via announcement in the Official Gazette. The first such MPC was established on September 29, 2016. Hence, statement 4 is not correct. — The Governor of the Reserve Bank of India serves as Chairman ex officio. — The MPC calculates the policy repo rate needed to meet the inflation objective. Hence, statement 2 is correct. — The MPC is required to convene at least four times per year. Hence, statement 1 is correct. — The MPC meets with a quorum of four members. Hence, statement 3 is not correct. — Each MPC member has one vote, and if there are equal votes, the Governor has a second or casting vote. Daily subject-wise quiz — Science and Technology (Week 107) Daily subject-wise quiz — Economy (Week 106) Daily subject-wise quiz — Environment and Geography (Week 106)
