India News and Features Alliance (INFA) - Looking Beyond Fossils Fuels:NEED TO CURB OIL IMPORT DEPENDENCE, by Dr. Vinod Mehta,27 April 2006

Recently the Finance Minister stated that the huge surge in global prices of crude is a matter of concern. In fact, it has always been so for India. It is common knowledge that the country does not produce enough crude to meets its requirements -- 70 per cent of it is met by imports. Worse, a large part of our export earnings are spent to meet our import requirements of crude and natural gas. As a result we have less foreign exchange for import of other products and services.

Thus there is need for constant monitoring and major efforts to reduce this dependence on imported crude for strategic reasons. It could be tackled at various fronts. At the first level, we need to increase the domestic output of crude oil by improving the recoveries from existing oil fields and by exploring new oil wells. At the second, we need to reduce the consumption of fossil fuel in a planned manner.

The Ministry of Petroleum has been actively pursuing a strategy for the past few years not only to increase the recovery of oil from Bombay High wells but also allowing the ONGC to enter into deals with foreign companies for oil exploration outside India on production-sharing basis. The first such venture was 20 per cent participation in a Russian oil firm Roseneft. The ONGC has invested about Rs 8,000 crore along with oil companies from the US and Japan and is expected to get about two to four million metric tonnes of oil and five to eight millions metric tonnes of gas.

In fact, the ONGC is giving out places for oil exploration. In the private sector, Reliance is exploring oil in the country and has met with some success. At the same time, the Government is actively pursuing the Iran-Pakistan-India gas pipeline deal and other gas sources in Central Asia and Burma. But results will take time.

Apart from increasing the availability of oil, the NDA Government had taken up the development of ethanol, which could be blended with petrol and diesel to reduce the consumption of imported oil. Three projects on Gasohol (blend of petrol and ethanol) have been launched in Maharashtra and in Uttar Pradesh. Ethanol which is extracted from sugar cane bagasse can be successfully blended with petrol. It is estimated that five per cent addition of ethanol will help save petrol to the tune of 3.3 lakh tonnes per annum. Brazil is way ahead in this regard and researches have shown that petrol-Ethanol blend is good for environment. However, it will take years before a reliable blend is devised for commercial use.

At the same time, the Government is also conscious of the terrible effect fossil fuel has on our environment. Unleaded petrol has been introduced to fight pollution in metropolitan cities. Apart from the extra low-grade sulphur unleaded petrol, low sulphur diesel has also been introduced in major cities. Besides, steps are being taken to check adulteration of diesel. Plus, manufacturers are told to switch to production of vehicles conforming to Euro III emission norms. All this is bound to have a salutary effect on our environment.

However, it must be understood that India does not have large reserves of crude oil, and that it will always be dependant upon imports to meet its requirements of petroleum products. And, that whatever refinements are introduced in fossil fuels like petrol and diesel, these will continue to harm environment. Therefore, there is need to think of an energy policy and reduce our dependence on fossil fuel by switching over to other sources of energy.

Why have we not been able to think on these lines? Well, because there is no integrated approach to energy requirements. We have separate Ministries/departments which deal with different kinds of sources of energy like coal, renewable sources of energy, nuclear energy and so on. The users of these energy sources are also treated as separate entities with little coordination amongst them. As a result, instead of a coordinated energy policy, we have separate policies for each of these sub-sectors, which are contradictory at any point of time!

It is here that the Government needs to act – to bring a strong coordination among Ministries. We should, in the next 10 to 20 years reduce our consumption of petroleum products and gas and switch over to other sources of energy. For instance, India has large deposits of coal and water resources which are used for electricity generation. If we switch our public transport system from the use of fossil fuel to use of electricity then not only would we be reducing our consumption of petroleum products but at the same time will be contributing to a cleaner environment and saving on our import bill. The Metro in Delhi is one such fine example.

However, the Metro rail system may not be cost-effective in small towns and cities, an answer could lie in mono-rail, trams and trolley buses. Many developed countries use these systems, which run on electric power. But, in India a decision to run trams and trolley buses would require coordination among Ministries. It is time the Government moves fast in this direction. ---INFA