Rs 1,000 crore fund to aim for energy security

In the push towards achieving energy security for the country, the government is likely to set up an autonomous national energy fund with a corpus of Rs 1,000 crore.

The fund, which will exclude the atomic energy segment, is proposed to be raised with the help of country's energy companies. For that, a 0.2 per cent cess will be levied on them.

The proposed fund was recommended by the Energy Coordination Committee that met on January 3 this year under the chairmanship of Prime Minister Manmohan Singh. "The recommendation of the committee has been sent to the Planning Commission and the finance ministry for implementation," a senior government official said.

The fund is being aimed at providing investment to research and development projects in the energy sector. Some of the projects that may benefit from the energy fund, once it comes through, will be gas hydrate and coal gassification programmes.

The lack of gas availability was also a cause of worry for the committee which recommended that new power plants be given the go-ahead only when long-term gas supply contracts were firmed. The "give or pay" and "take or pay" contracts have been recommended, where the buyer and seller of gas agree to trade a contracted amount of gas. But if either party does not supply or buy the contracted amount, they still pay the other party the money for the entire contracted amount.

The committee headed by the prime minister has said that gas prices need to be regulated and administered priced gas (APM gas) needs to be allocated to priority sectors such as fertiliser plants, existing power plants and liquid natural gas.