Billions Needed For Indian Power System As Economy Booms

Indian energy demand is set to jump four-fold within 25 years but its creaking system is hampered by power theft and dwindling coal supplies, a report said April 3. The energy sector needs up to $10 billion of private investment over six years just to keep up with demand for power from an economy that is growing at 7%-8%, said the report by the KPMG consultancy.

The network loses up to half of production through illegally diverted power and transmission problems leading to power cuts and under-supply, it said. India has also failed to tap huge hydroelectric potential. However, the key concern is the expected exhaustion of coal supplies in about 40 years on current trends, the report said. Coal is the key material for power generation as India depends on imports of oil and it needs to link-up with suppliers abroad and focus on other forms for power generation.

"With its energy requirements expected to grow at around 5% or 6% per annum over the next few years, there is an urgent need for India to strategically re-evaluate its supply options," said Partha Bardhan, head of KPMG's energy wing in India. "Hydro-electric and nuclear power seem to be the obvious options but improved frameworks are needed to attract the private sector participation which is so crucial to realizing India's potential in these areas."

India last month struck a landmark agreement with the U.S. to receive nuclear technology in exchange for allowing international inspection of some of its plants. The leaders of Australia and Britain last week warned that the growing energy needs of India and China represented potential environmental and power supply problems for the world.

Copyright Agence France-Presse, 2006

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