Niti's National Energy Policy to be umbrella plan for all energy ministries

National Energy Policy to become guiding policy for half a dozen ministries

The National Energy Policy (NEP), being drafted by the NITI Aayog, will become the guiding policy for all energy ministries. 

Encompassing regulations for coal and mines, renewable energy, oil and gas, and the environment, the NEP will be put up for the Union Cabinet soon.

This could be the first time that a single integrated policy would cover half a dozen ministries.

People involved in the drafting said all energy ministries and also energy-consuming departments would have to follow the NEP in formulating their own policies and regulations. “The manner in which each department designs its policy should be consistent with that of others,” said a government official. 

Earlier, the FAME (faster adoption of manufacturing electric vehicles) scheme called for an inter-ministerial action plan. The validity of the NEP has been suggested to be till 2030. Officials said it had been sent to the Prime Minister’s Office already.

India’s apex think tank has been drafting the NEP since 2017. Officials say it will address some of the latest issues of the power sector as well. 

Changing the energy mix with a rising share of renewable sources, climate change concerns, abundance of natural gas supply, and volatility in the oil market form part of this long-term outlook.

The official said global investors wanted a stable and long-term energy outlook for India, and such a policy, keeping the latest scenarios in mind, “has never been drafted in this country”. 

READY RECKONER

• NITI Aayog’s National Energy Policy to be overarching guiding policy for all energy, energy consuming sectors/ministries
• To focus on clean energy, reduce fossil fuel dependence
• Suggestions hint at no reduction in domestic coal production
• Long-term plan suggestions till 2030
• Energy framework aimed at global investors

Following the targets set under climate-change consultations, the NEP is looking at “reducing the consumption of fossil fuel but not coal”, said a senior executive who is part of the consultations. 

During climate-change negotiations, India has stated it will have 40 per cent of its energy from non-fossil fuel sources, but cannot commit itself to reduction in using coal. 

The tariff policy, which has been pending for more than seven months, will also be based on the NEP, official sources said. This, they said, is to address the worsening condition of state-owned power distribution companies (discoms).

“The Centre can’t keep pushing the same set of financial restructuring again. It is not a solution. The functioning of the discoms needs to evolve and be efficient,” said an official. 

The NEP has proposed that any funding by the Centre to the states should be linked to their quality of power supply. It has also reiterated the need for direct benefit transfer (DBT) of subsidy in power rates. 

“Tariffs should be market-driven and the mentality among consumers that electricity is free or should be subsidised should change. It’s an economic product and needs to be treated as such. We have suggested the means to make tariffs market-linked,” said a senior officer. 

The NITI Aayog has introduced two chapters in the draft NEP — ‘Subsidy and taxation reforms’ and ‘Restructuring of energy sector governance’. 

Domestic fuel sourcing is also one of the pillars of the NEP, which favours enhanced domestic coal production, and manufacturing in the renewable sector.