BJP Manifesto: Energy

In its election manifesto BJP says it'll focus on development of energy infrastructure, human resource development and upgradation of technology

The BJP government has some good job up its sleeves for India's energy sector. The party which will shortly form a government at the centre had laid out a road map for a responsible and comprehensive 'National Energy Policy' in its election manifesto, focusing on development of energy infrastructure, human resource development and upgradation of technology.

BJP which said it considers energy efficiency and conservation crucial to energy security, would take steps to maximize the potential of oil, gas, hydel power, ocean, wind, coal and nuclear sources. The industry keenly awaits the BJP plan of action now.

"There are high expectations from the new government. The power sector is plagued with problems like inability to raise finances and getting clearances for new projects. A good thing for the new government to do would be to consolidate the existing oil and gas, coal and power ministry into one energy ministry which would help the industry work well and faster," said the CEO of a power company.

BJP's national energy policy includes setting up of small-hydro power generation projects to harness the hydropower that is not being used at the moment. "Small projects can be set up with local support and without displacement of the local population," its manifesto had said.

The party had also decided to take steps to increase domestic coal exploration and production, to bridge the demand and supply gap and give a thrust to renewable sources of energy as an important component of India's energy mix and expand and strengthen the national solar mission.

Care Ratings, on its note on elections and economic outlook said, "The BJP had promised that, if elected, he would take decisive action to unblock stalled investments in power, road and rail projects to revive economic growth. This would also result in easing of doing business. This will help in reviving the investment cycle."

Anaylsts said energy companies would benefit from the economic recovery and improving financial condition of the discoms would lead to higher PLF.

NDA government's agenda to ramp-up domestic production and better the country's power scenario would be a positive for companies like Coal India.

Ambit Capital said with India's new Government enjoying an absolute majority in the Lower House of the Parliament, legislative activity is likely to pick-up in the coming five-year period and amending legislation to allow the non-captive use of coal is likely to be high on the new Government's agenda. "We expect this sector to be a core focus area of the new Government especially in light of BJP as well as Modi being supporters of reviving the fortunes of this sector," it said.

BJP said its emphasis remains on beginning of a new thrust on framing policies that would serve India's national interest in the 21st century. We will follow a two-pronged independent nuclear programme, unencumbered by foreign pressure and influence, for civilian and military purposes, especially as nuclear power is a major contributor to India's energy sector," the party had said.

The party said it will, study in detail India's nuclear doctrine, and revise and update it, to make it relevant to challenges of current times and invest in India's indigenous Thorium Technology Programme.

Oil and Gas

For the upstream, midstream and downstream sectors a five point agenda that needs to be addressed is-- diesel price hike; LPG reforms; natural gas price hike; subsidy sharing formula and clarity on the E&P reforms.

"A clear majority would rather encourage the government to fast forward de-regulation process through more frequent hikes (fortnightly or weekly). It can be more or less implied that de-regulation is for sure," said ICICI Securities in a report.

The industry is also expecting that the NDA government may consider lowering the cap on LPG cylinders back to 9 which was successfully implemented by the oil marketing companies in FY14.

A key decision that would decide the future course of investments in upstream segment is the increase in gas price which would provide a road map towards free pricing.

The upstream industry is hopeful of that the new government would take a serious look at the subsidy sharing formula."The UPA II government was close to implementing this (proposing US$65/bl net realisation for ONGC / OIL). The NDA government might choose to implement this by 2Q FY15, after taking stock of the oil marketing companies under-recovery trends," said ICICI Securities.

BJP's manifesto promised that oil and gas explorations would be expedited in the country which would help to reduce the import bill. The industry awaits clarity on E&P reforms and expects the government to stick to Kelkar committee recommendations of continuing with the cost recovery mechanism.