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Parity in energy prices needed for higher growth: Montek

According to reports, concerned over rising energy import bills amid a weaker rupee, Montek Singh Ahluwalia, the deputy chairman of Planning Commission on Friday said there is a need to raise energy prices to achieve nine per cent growth.

“Domestic coal prices are one third of international rates at present. There is need for better alignment of energy prices,” he said while speaking at the foundation day ceremony of National Aluminum Company (Nalco) here and in the process backed the Coal India Ltd (CIL) move to implement a new coal price structure effective from this year.

The recent CIL move to sell coal according to gross calorific value, instead of useful heat value method used earlier, has been opposed by government as well as private thermal power stations. Even UPA’s key ally and West Bengal Chief Minister Mamta Banerjee has expressed her displeasure over the issue on concerns that the price rise would necessitate electricity tariff hike.

But the plan panel deputy chairman said, the price rise in energy sector is necessary for higher growth.

“To achieve 9 per cent growth, we would be requiring about 6.5 per cent growth in overall energy sector. The loss making electricity distributing companies (discoms) should raise tariffs to support the growth,” he added saying that state governments often do not want the discoms to raise power charges.

Ahluwalia also supported raising the prices of petroleum products saying the nation cannot afford to subsidise costlier oil imports.

“Petrol prices in India are more or less in alignment with the international market. But diesel is 20 per cent cheaper and kerosene is 75 per cent lower than global markets. So, when we are importing high cost energy, we are subsiding it and we can not afford that,” he said.

Crude oil contributes the most to Indian energy consumption, next to coal. India imports over 80 per cent of its oil requirement.

Speaking about the 12th Five Year Plan, the plan panel official said, the Central government needs to give attention on transport and infrastructure development, along with energy sector. He said cooperation of state governments is required to roll out Goods and Services Tax, (GST), which could be a game changer in the way India would grow in next five years.


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