Energy pricing is a core problem with India, and India’s energy sector will require USD 2.3 trillion in investments by 2035, says a new report released by Asian Development Bank.
Oil prices in India are government-controlled and do not fully reflect the procurement prices. Kerosene and diesel, in particular, and even liquefied petroleum gas are priced far lower.
India’s energy sector will require USD 2.3 trillion in investments by 2035, which will account for about 95.6 percent of total investment requirements in South Asia and about 20 percent of the total investment requirements in Asia and the Pacific.
The projections are for a period of 25 years from 2010 to 2035. Besides India, other nations in the South Asia region are Bangladesh, Bhutan, India, the Maldives, Nepal, and Sri Lanka.
In the business-as-usual scenario, the final energy demand of India is projected to increase at an annual rate of 2.7 percent from 2010 to 2035, a slower rate compared with projected GDP growth rate of 5.7 per cent during same period.
According to ADB report, coal will remain dominant through 2035, driven by the power sector. India will continue to account for the bulk of the energy share in South Asia at 92.5 percent in 2035.
Being a country that faces immense energy crisis, economic impacts of importing fossil fuel, oil, gas and coal are rising, and energy security has become a policy priority for India, ADB said.
The report further says electricity price controls have curtailed the motivation to invest in new power plants, further hurting electricity supply.