Be the first to like this
India has the fourth largest energy demand in the world after United States, China and Russia. Marked by low investments, lack of regulatory clarity, process delays and low reserves of oil and gas, the domestic output of primary energy has not been able to cater to the demand, resulting in an increase in total energy imports. In addition to straining the international currency reserves, rising imports also expose India to greater geopolitical risk, international price volatility and intensifies international competition for energy reserves.
Given the impact of imports on the economy, the Government has removed the subsidy on petrol and has increasingly linked diesel price to market prices. The crude oil price has increased by 14 per cent resulting in a corresponding increase in prices of other industrial fuels. Diesel has shown an increase of 12 per cent whereas price of natural gas has increased at the rate of 30 per cent. The price of coal (domestic supply) has also witnessed an increase of 11 per cent during the last year. The fuel price increase has also resulted in corresponding increase in power tariffs. In Maharashtra, one the most industrialised states, the power tariff has seen an increase of18 per cent during the last four years.
For industries, energy is an important component of overall costs. The impact of rising energy costs will be felt differently by industry based on energy intensiveness of the production. For certain industries the energy cost is more than 10 per cent of the total expenses. A small variation in fuel prices will have a high impact on profitability of companies in such sectors.
In this report we have tried to articulate the energy related challenges faced by the industries in India and analyse how energy management can not only help industries optimize energy costs and enhance reliability in supply, but also lead to an increase in competitiveness in markets.