Energy sector needs $10 bn in six years, says KPMG

The potential for private sector investment in the country's energy sector could be around $9-10 billion over the next 5-6 years.

Of this, power transmission alone could attract as much as $ 4.5 billion, with energy management and investments in coal mining attracting up to $3 billion and $2 billion, respectively, according to a recent KPMG report on the sector.

The report points out that in order to create an energy security environment, the government would need to diversify its energy supply base and improve long-term supply security.

It would need to enter into alliances with key supplier nations in Asia, Africa and Latin America. The report also emphasises the need to develop an integrated energy policy to ensure long-term energy security.

At the operational level, the report highlights the need for stepping up investment in infrastructure, such as rail, roads, ports and power transmission to ensure efficiency in the energy value-chain.

The coal sector, the report says, presents an immediate opportunity for private investors as reserves in excess of 1,000 million tonnes are being allotted for captive mining.

The gas sector too offers opportunities, as the demand side of auto CNG and piped gas are together expected to account for 7 per cent of the total demand in the next five years.

In the power sector, there are emerging opportunities in generation as well as transmission and distribution.

The report, however, warns that opportunities in distribution may be fewer owing to the large risks involved.

The report also highlights opportunities in hydro power and renewable energy.

In the renewable energy sector, it points out that there is potential in small hydro and wind energy, where the government is targetting an additional capacity of 10,000 Mw by 2012. On the hydro front, opportunities lie in the 45,000 Mw capacity addition targetted in the next 10 years.