Summary: The current energy value chain works in silos. India needs an integrated Energy authority.
Background:
The recent coal shortage shows flaws in the entire energy production chain. There is no public body at the government level with executive oversight, responsibility, and accountability for the entire energy value chain.
What are the challenges leading to the energy crisis?
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Structural issues: The cycle of blame game (#Diagram)
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The problem of the failure of ‘Coal India’ in managing the production process has roots in power generation companies, which in turn is related to the DISCOMs inability to pay back the dues.
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DISCOMs ultimately blame the politics for compelling them to sell electricity to residential and agricultural sector consumers at subsidized tariffs, whereby the cost of energy is not recovered.
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There is no energy strategy with the executive authority. NITI Aayog and planning commissions policies are mere recommendations without executive force.
What is the solution?
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The government should pass an Act granting energy the ‘constitutional sanctity’ and frame for the formulation and execution of an integrated energy policy.
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Laying out measurable metrics for monitoring the progress towards the achievement of energy independence, security, efficiency, and “green” energy.
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Single ministry: ‘Ministry of Energy’ should be created to oversee the currently siloed verticals of the ministries of petroleum, coal, renewables, and power.
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As it could be politically challenging, therefore an executive ‘department’ can be created under PMO. The objective would be to identify and handle all of the issues that currently challenge the value chain.
What are the potential benefits?
This would increase investments in the energy sector if the current fragmented and opaque regulatory, fiscal, and commercial systems and processes were replaced by a transparent and single-point executive decision-making body for energy.